Pension Revolution

Pension systems in the developed world are becoming increasingly risky propositions. More and more workers reach retirement age expecting lifetime security, only to find little more than empty promises and IOUs in their retirement packages. How did we get here? And, more importantly, what must we do now to rethink, revamp, and revolutionize our failing pension systems? Pension Revolution features a point-by-point analysis of the reasons for today's unfolding pensions crisis. Written by award-winning and globally recognized pension and investment analyst Keith Ambachtsheer, this well-researched exploration provides members of the business, labor, government, and professional communities with a timely, insightful look at everything from pension design, organizational structure, and investment beliefs, to risk management, performance measurement, and results disclosure. Its 46 chapters ask hard questions and provide workable solutions, including: What Australia and several European nations are doing to radically reshape the pension paradigm through both legislative and regulatory actions The dangers of using a return assumption with an embedded risk premium to value pension promises Strategies for using a game theory framework to design collaborative pension plans destined to remain collaborative How three highly successful pension plans combine optimal value and strong governance for their stakeholders Why decisions based on the capital asset pricing model, long accepted as gospel by devotees of long-term stock market investing, can be dangerously wrong-headed But more than just exposing the flaws of today's pension approaches, Pension Revolution proposes a new arrangement-the revolutionary and practical TOPS (The Optimal Pension System) approach. The TOPS approach, currently in use by only a handful of successful plans including the highly respected TIAA-CREF system in the United States, effectively controls costs and conflicts while creating a new class of informed, independent, long-horizon investors. Pension Revolution provides a step-by-step primer on how and why TOPS represents the future of responsive, responsible pension plan design and management, and what you can do to install TOPS-style effectiveness into your own program. As decades of ineffective pension fund governance runs up against the hard reality of today's burgeoning class of retirees, traditional pension plans are living on borrowed dollars and borrowed time. Pension Revolution explains what decision-makers can and must do-starting today-to reverse this dangerous course, and place the provision of retirement income for millions of workers on a sustainable track.