Planning for retirement set to become tougher

AsiaOne
Mon, Nov 24, 2008
The Straits Times
Planning for retirement set to become tougher

By Alvin Foo

PLANNING for retirement is going to become more tricky in the light of the financial crisis, said experts at a conference here yesterday.

They were speaking at a seminar on on The Future Of Silver Security: Coping With Crisis And Uncertainty.

This is the first of a series of events to kick off the new Centre for Silver Security at the Sim Kee Boon Institute for Financial Economics at Singapore Management University.

The recent financial tsunami, which savaged stock markets, left some insurers in jeopardy and pension funds facing steep losses, is adding to the uncertainty involved in retirement planning.

'Now, you may actually outlive the insurance company,' said Ms Anne Tay, OCBC Bank's vice-president of group wealth management, during a panel discussion and to much laughter.

The speakers also included pension research expert Olivia Mitchell, of the University of Pennsylvania's Wharton School.

She said: 'With a global asset meltdown, the risks are mostly undiversifiable...there's no safe port in such circumstances.'

Mr Todd Groome, monetary and capital markets adviser for the International Monetary Fund, added: 'In October, we crossed the line from a liquidity crisis to a solvency crisis...we're going to have a deeper global recession than expected, we'll have more bank failures.

'We may need a complete rethink of retirement savings and risk-sharing arrangements.'

Among the key issues is health-care costs, with the projected costs being potentially 'staggering' and 'volatile'.

There is also a need for better public-private partnership to educate, create, supervise and regulate new financial products and markets for an ageing world.

Some advice dished out to policymakers and those planning for retirement: invest in financial literacy, work longer, insure against longevity and make home equity accessible.

Despite the recent carnage, it was not all gloom and doom. As Professor Mitchell advised: 'Don't panic, especially if you are young or middle-aged. The markets will recover.'