World’s Largest Fund Manager Warns That Retirement Age of 65 is Unrealistic

World’s Largest Fund Manager Warns That Retirement Age of 65 is Unrealistic

retirement

The world faces a looming pensions crisis as people live longer, the boss of the world’s biggest fund manager has warned.

BlackRock Chairman and CEO Larry Fink Said Longer Lives Mean Workers I may have to retire later in life to ensure that their savings support them until they die.

In his closely watched annual letter distributed to investors, Mr Fink said: “No one should be forced to work longer than they want to. But I find it a little crazy that our flagship idea for retirement age – 65 – comes from the days of the Ottoman Empire.

“When you regularly live past 90, what should the average retirement age be?

The billionaire investor, who founded BlackRock in 1988, is considered one of the most influential voices on the global stage, with his statements often setting the tone for political discussions around the world.

Larry Fink, Chairman and CEO of BlackRock Inc.Larry Fink, Chairman and CEO of BlackRock Inc.

Fink said Dutch policy of raising retirement age based on life expectancy was a possible solution – Victor J. Blue/Bloomberg

Mr Fink, 71, said he feared not enough was being done to ensure people had enough money to protect their pensions and that “urgent” action was needed to help people to build up more substantial retirement funds when they get older.

The Wall Street boss said he wanted to “start having the conversation” on the issue as soon as possible. demographic evolution around the world are leading to rapid aging of populations, with countries having to develop capital markets like the United States to help pay retirees.

Anti-obesity drugs such as Wegovy were also contribute to a longer lifeand sometimes adding 10 extra years to a person’s lifespan, he said, but there hasn’t been enough focus on putting enough money aside to live those extra years comfortably.

“As a society, we devote a lot of energy to helping people live longer. But even a fraction of that effort isn’t dedicated to helping people pay for those extra years,” Fink said.

According to UN projections, one in six people in the world will be over 65 by 2050, compared to one in 11 in 2019.

In the UK, the pension age has gradually increased from 65 and the government introduced automatic pension enrollment ten years ago to stave off the crisis.

Currently, people can start claiming the state pension at 66, but this figure is expected to rise to 67 by 2028.

Last year, Chancellor Jeremy Hunt was forced to postpone plans to raise the retirement age to 68 due to falling life expectancy.

Spending on UK state pensions is also expected to rise from 5.1% of GDP to 8.6% of GDP by 2072-73, according to the Office for Budget Responsibility (OBR).

Both the Conservatives and Labor pledged to keep the pension triple lock, which ensures payments increase by the greater of an increase in prices, incomes or 2.5% a year, would remain in the next parliament.

Prime Minister Rishi Sunak insisted on Tuesday that maintaining the policy would be affordable.

However, the Institute for Fiscal Studies (IFS) has warned that the triple lock could increase spending by an extra £5 billion to £45 billion a year by 2050.

Over the past few decades, changes in the pensions industry have shifted all retirement risks from employers to workers.

Defined benefit (DB) schemes, which guarantee retirees a fixed level of income when they retire, are being phased out in favor of defined contribution schemes, whose payment is based on the total level of savings and accumulated investment gains.

The BlackRock chief said baby boomers with defined benefit plans had an “obligation” to help Gen Z and millennials save more for retirement.

He said: “Young people have lost trust in older generations. It’s our responsibility to get it back. And maybe investing for their long-term goals, including retirement, isn’t such a bad place to start.

BlackRock is the world’s largest asset manager, overseeing around $10 trillion (£8 trillion) in assets under management.

More than half of these assets are allocated to retirement products.

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