The G-30 said that while the shift by corporations away from defined benefit to defined contribution retirement plans like 401(k)s for their workers had in some ways been inevitable, it has not worked out well for many individuals. The group suggested hybrid retirement programs as a possible solution, including guaranteeing minimum investment returns for defined contributions.
“Reforms to defined contribution should enable individuals to benefit from collective investment management, at low cost, and not have their retirement savings hostage to market cycles as much as they are today,” G-30 Chairman and Singapore senior minister Tharman Shanmugaratnam said in a statement.
The report acknowledges that confronting the coming crisis will be difficult because it will involve potentially politically unpopular decisions.
Making it “even more arduous is that it occurs at a time when governmental institutions are increasingly mistrusted, mainstream political parties are under strain,” and voters are becoming more diverse as well as “susceptible to populist rhetoric and demagoguery,” the G-30 said.
This article was provided by Bloomberg News.