‘Undefined retirement income is bane of Contributory Pension Scheme’

Articulating this position, recently, a stakeholder in the pension industry, Dr. Timi Austen-Peters, lamented that “no one knows how much retirement income would be available” at retirement.
Austen-Peters decried the practice of shifting to individuals most risks in the scheme, including investment risks, market vicissitudes, labour, longevity and inflation.
He noted the absence of an ultimate pension target, saying situation has caused a major disconnect between “accumulation and decumulation phases” with further resultant “unfounded expectations.”
He lamented that attention was placed on short-term measures such as fees, benchmarks and supervisors’ approaches.
Commending the gains achieved in transiting from Defined Benefits (DB) to Defined Contributions (DC), he called for a further transition to Defined Ambitions (DA) in order to define the income that would be available to retirees at retirement.
“The world has moved swiftly from DB to DC and now the move to DA has started,” he stated.
He explained that DA, if transited to, would avail the pension industry have Target Retirement Income (TRI). He called for the articulation of TRI framework, using long-term ultimate pension result as a means of addressing the problem of undefined income at retirement.
He revealed that the essential elements of TRI are long-term targeting, benchmarking, supervision and communication.
Elaborating on the way forward, Austen-Peters counseled that the “focus should be on skills, culture processes and systems.”