A major global crisis
is threatening the 3 pillars of pension systems.
01
Social security benefits
02
Occupational pension plans
03
Individual retirement accounts
Why?
Demographic imbalances, driven by increases in life expectancy.
Demographic imbalances, driven by increases in life expectancy.
Consequence? Individuals will fail to achieve adequate levels of replacement income in retirement.
The landscape
Retirement Products
“Security without liberty is prison”
Insurance Products
such as annuity-type contracts, provide security without flexibility. In particular, they are subject to high surrender charges and do not allow for wealth tranfer to heirs.
Investment Products
such as target date funds (TDF), provide flexibility without security. In particular, they do not allow individuals to secure target levels of replacement income in retirement.
THE SOLUTION
Flexicure
(Flexible & Secure) Retirement solutions
Introducing
retirement bonds
What are they exactly?
A portfolio of fixed-income securities,
providing same cash flows as annuities, bearing the same costs but without being irreversible. Designed for the first 20 years of retirement.
In parallel, a deferred annuity
taking care of the retirement period.
Less expensive than the annuity covering the whole period.
Less expensive than the annuity covering the whole period.
Replacement income needs = annuity cash flows =
retirement bond cash flows + deferred annuity cash flows
Improved
Target Date Funds
The retirement bond can be used to improve multi-asset investment strategies. To construct an improved form of target date fund mixed with equity for instance.
Results are compelling : an improved target date fund mixed with equity has more chances to reach any objectives than the standard fund.
Our ambition : launch 2nd generation target date funds that offer both flexibility and security with respect to individuals' replacement income needs in retirement…
... and that can be used as part of the solution to the global pension crisis.