Home > Uncategorized > Financialization, austerity and pension funds

Financialization, austerity and pension funds

from Maria Alejandra Madi

By 2020, the largest pools of pension fund assets are projected to remain concentrated in the US and Europe. In North America, pension fund assets reached $19.3 trillion in 2012 and PwC estimates that by 2020, pension fund assets will rise by 5.7 percent a year to achieve over $30 trillion of the $56.5 trillion in total global assets, more than 50 percent of the global total.

Indeed, according to the PwC report, Asset Management 2020: A Brave New World, demographic changes, accelerating urbanization, technological innovations and shifts in economic power are reshaping the asset management environment where pension funds have been playing and  will play an outstanding role in the global saving and investment process.  Three key factors seems to stimulate the global growth in assets: i) changes in government-incentivized or government-mandated retirement plans that will turn out to increase the use of defined contribution (DC) individual plans; ii) faster growth of high-net-worth-individuals in South America, Asia, Africa and Middle East regions up to 2020; iii) the expansion of new sovereign wealth funds.

However, in spite of the pension funds’ power to centralize huge amount of “savings from workers”, in this scenario of financial globalization, workers do not seem to have strong defense against the impacts of the current global scenario on the savings of workers and the flows of workers’ income.  read more

  1. patrick newman
    February 22, 2017 at 9:58 am

    It is not just the extention of retirement age (more realistically it is the age at which pension is paid – must not confuse the two!). There is also the change to lower rates for adjusting pension payment for inflation. In the UK it is in the public sector the change from RPI to CPI and payment linked to average earnings not final salary. CPI is anyhting from .5% to 1% less than RPI. This change is now in prospect for the many defined benefit schemes in the private sector. Occupational pensions often well exceed state pensions which are set a some sort of theoretical minimum living standard but total reliance on which is impossible without supplementary state benefits.

  2. Mike Hall
    February 22, 2017 at 11:44 am

    How long will it be before I see a mainstream economist point out that pensions’ savings are probably the biggest Paradox of Thrift elephant in the room there’s ever been? In essence, pensions’ saving, for any but small numbers, is one big Finance sector scam.

    Seriously… do any in the mainstream actually have any concept of MACRO economics any more? Seems to me, no. All I see is micro economics masquerading as macro. Probably the defining economics characteristic of the neoliberal intellectual fraud era.

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