A Pension Game of Risk: Key Issues Around the World

What is the Big Idea?


Ford and General Motors might be setting the new standard for U.S. companies when it comes to managing pension obligations. G.M. reduced its pension liabilities by $26 billion earlier this month by offering lump-sum payments to thousands of retired white collar employees to reduce its pension obligations, which are the biggest in the nation. 

Pension obligations have been a thorny issue for boardroom executives since the start of the millenium and the problem isn't limited to the U.S. The rest of the world feels the sting as well. 

Dr. David Blake, Professor of Pension Economics at Cass Business School, gave us a global perspective of the pension problems in the U.S., U.K, Canada, Holland and Ireland.

Watch Professor Blake talk about the key pension issues around the world:

What is the Significance?

Problems vary form country to country. And the solutions leave some of us better off than others. Canada and Holland both have better pension schemes and the U.S. will "end up with much lower pensions than Dutch retirees in 20 years time," says Dr. Blake.

Yet with all these varying issues and outcomes, they all have this in common: companies are pouring billions of dollars into pension schemes to fulfill its obligations, but persisting deficits means much of this financial support is all for nothing. 

The U.K.’s largest 350 companies put £20 billion ($31 billion USD) into their direct benefit (DB) schemes over the 12 months to March 2012, yet deficits increased by £17 billion, according to a Mercer report. At the end of 2011, the S&P 1500 companies contributed an additional $70 billion to their pension plans over the course of the year, yet deficits increased by $169 billion to reach $484 billion in the U.S. 

"This pattern repeats across all major developed countries as corporations do battle with a number of risks, which, left unmanaged, promise to threaten the future stability not just of their pension plans but of the very businesses that underpin them," says the report.

So how can company leaders manage pension risks and obligations? Frank Oldham, Senior Partner at Mercer tells us here. 

About “Inside Employers’ Minds”

 “Inside Employers’ Minds: Confronting Critical Workforce Challenges” features a dedicated website (www.mercer.com/insideemployersminds) which contains a number of resources focused on addressing each key issue.

Photo courtesy of Gunnar Pippel/Shutterstock.com.

Befriend your ideological opposite. It’s fun.

Step inside the unlikely friendship of a former ACLU president and an ultra-conservative Supreme Court Justice.

Sponsored by Charles Koch Foundation
  • Former president of the ACLU Nadine Strossen and Supreme Court Justice Antonin Scalia were unlikely friends. They debated each other at events all over the world, and because of that developed a deep and rewarding friendship – despite their immense differences.
  • Scalia, a famous conservative, was invited to circles that were not his "home territory", such as the ACLU, to debate his views. Here, Strossen expresses her gratitude and respect for his commitment to the exchange of ideas.
  • "It's really sad that people seem to think that if you disagree with somebody on some issues you can't be mutually respectful, you can't enjoy each other's company, you can't learn from each other and grow in yourself," says Strossen.
  • The opinions expressed in this video do not necessarily reflect the views of the Charles Koch Foundation, which encourages the expression of diverse viewpoints within a culture of civil discourse and mutual respect.
Keep reading Show less

First solar roadway in France turned out to be a 'total disaster'

French newspapers report that the trial hasn't lived up to expectations.

Image source: Charly Triballeau / AFP / Getty Images
Technology & Innovation
  • The French government initially invested in a rural solar roadway in 2016.
  • French newspapers report that the trial hasn't lived up to expectations.
  • Solar panel "paved" roadways are proving to be inefficient and too expensive.
Keep reading Show less

Physicist advances a radical theory of gravity

Erik Verlinde has been compared to Einstein for completely rethinking the nature of gravity.

Photo by Willeke Duijvekam
Surprising Science
  • The Dutch physicist Erik Verlinde's hypothesis describes gravity as an "emergent" force not fundamental.
  • The scientist thinks his ideas describe the universe better than existing models, without resorting to "dark matter".
  • While some question his previous papers, Verlinde is reworking his ideas as a full-fledged theory.
Keep reading Show less

Physicists find new state of matter that can supercharge technology

Scientists make an important discovery for the future of computing.

Pixabay
Surprising Science
  • Researchers find a new state of matter called "topological superconductivity".
  • The state can lead to important advancements in quantum computing.
  • Utilizing special particles that emerge during this state can lead to error-free data storage and blazing calculation speed.
Keep reading Show less