October 1, 2018

Saving Retail Retirement Savers: What It Will Take

“…..Canadian politicians seem to be content fiddling with ABM fees while three-quarters of Canada’s private sector workforce lacks adequate workplace pension provision. Maybe we should close the honourable members’ own generous pension plan. That should get their attention.”

THE AMBACHTSHEER LETTER, APRIL 2007

 “…..the value-adding investment results of fiduciary principles-driven pension funds contrast sharply with the material value-losing performance of retail mutual funds. As a result, fiduciary principles-driven pension funds will easily generate twice the pension per dollar of retirement savings than a dollar invested in the average mutual fund.”

THE AMBACHTSHEER LETTER, MAY 2016

 “…..it is illegal to favour one group of stakeholders (e.g., service providers) over another group (e.g., retirement savers). Perhaps a class action lawsuit by Australian Retail Super Fund plan members against their ‘trustees’ is needed to make this absolutely clear.”

THE AMBACHTSHEER LETTER, JUNE 2018

 

Will This Time Be Different?

It is usually not good form to quote oneself. This Letter breaks that rule to make a point: leaving workers to sort out the own retirement finances never has been, and never will be a good idea. Previous Letters pointed to three reasons for this: #1. Creating and enforcing one’s own retirement savings discipline is hard, #2. The ‘for profit’ financial services industry has long turned its informational advantage over retail retirement savers into a material source of unearned profitability for itself, and #3. Reasons #1 and #2, combined with changing labour markets, capital markets, and employer attitudes, will likely lead to material financial hardships for many middle- and lower income workers in countries with inadequate retirement income systems in the decades ahead.

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