Small World, Isn't It?

There I was lucky me! strolling down Piccadilly on a lovely London afternoon. It was only after a couple of minutes that I became aware I had started to whistle the song “Small World” from the musical “Gypsy.”

And it was only later that I realized how appropriate that song was at that particular time.

I had just left the Global Financial Leadership Foruma meeting sponsored by the American Council of Life Insurers, A.T. Kearney and EDS where, in one sense, the message that came through loud and clear was precisely that: It’s a small world and countries in every part of the globe are experiencing exactly the same pressures when it comes to their rapidly aging populations.

It’s true that no one at the meeting actually sang the words, “We have so much in common, it’s a phenomenon,” but speaker after speaker did talk about the forces pressing on government pension systems and the nearly universal push to make people more responsible for their retirement.

This was true in countries such as Germany and Great Britain, where a government pension system has long been in place. But it was also true, speakers said, in developing countries such as Brazil and India.

If one was unfamiliar with the so-called Three Pillar model for retirement security before this meeting, that certainly was not the case after it. The three pillars consist of first, a government pension program; second, employer-sponsored programs; and third, individual savings.

The problem in many Western countries is that what has been promised to pensioners in Pillar I has and will become more and more difficult for governments to deliver. The main culprits here are an aging population that is living longer combined with a generally decreasing pool of workers to support the system. In addition, the cost of living in retirement has risen greatly over the years.

This sounds familiar to anyone who has thought about the Social Security system here in the U.S.

Fred Hubbell, chairman, executive committee, ING Americas, in Amsterdam, gave as good a summary of the situation as any during a luncheon address. The three pillars need to be brought into more balance around the world, he said, adding that many consumers all around the globe still have a lot of confidence in Pillar I.

“This means we have not been doing a good job of educating,” he said. “We need to develop consumer confidence in all three pillars.”