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Vers une retraite plus flexible et efficace

Key Points

  • The shift from DB to DC plans is a major trend in global pension markets. Target-date strategies, the default investment solution for most DC plans, will be subject to heavier saver protection regulations and will be expected to meet an increasing need for individual customisation. An efficient ‘glide-path optimiser’ should be flexible enough to incorporate these factors.
  • AXA IM’s multi-period optimisation model is a response to this. It integrates regulatory and individual factors into a capital market simulation engine. The resulting investment solutions are designed to offer investors an optimal balance between portfolio diversification, changing risk profiles and outside constraints.
  • Under this new framework, we can design the optimal glide paths for different risk profiles. Each of them will seek to offer the best expected wealth at retirement while controlling the risk of principal loss.
  • An investor’s risk profile changes over time according to their needs. We believe our glide path solution is a superior answer to this problem compared to the traditional constant-mix.

The changing face of pension markets

Pension schemes are under pressure. Not only have funding ratios been playing catch-up since the global financial crisis, but the triple threat from rising life expectancy, declining birthrates and long-term lower interest rates has made the road back far more difficult. At the same time, the regulatory response to the 2008/2009 crash has quickened the pace at which occupational defined contribution (DC)[1] plans and personal saving plans are gaining prominence over defined benefit (DB)[2] plans across the world. This environment has been reflected by three key responses in the market:

  • Risk has been transferred from institutions to individuals (the switch from DB to DC).
  • Tax incentives have been used to encourage early, long-term investment through DC plans to participate in economic growth and enhance future retirement income.
  • Governments have encouraged the use of voluntary “third pillar” personal-saving schemes to ease the pressure on state pensions and second pillar occupational pensions, and to build up complementary income sources for retirement.

We have seen this trend in recent pension system reforms, including Norway’s introduction of a new individual pension scheme in 2017 and France PACTE law in 2019. Outside of Europe, Japan loosened restrictions on individual DC plans in 2017, and China launched its own individual pension reform a year later.

 

[1] A Defined Contribution sees the employer, employee, or both make contributions on a regular basis. Individual accounts are set up for participants and future benefits are based on the amounts credited to these accounts plus any investment earnings.

[2] In a Defined Benefit pension plan, the employer/sponsor promises a specified pension payment, lump-sum or combination thereof on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending on investment returns.

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