Home Money Blackrock boss warns of a global retirement crisis as people live longer but cannot afford to pay for it

Blackrock boss warns of a global retirement crisis as people live longer but cannot afford to pay for it

by Elijah
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Retirement shock: Blackrock boss Larry Fink cited figures showing one in six people will be over 65 by mid-century, up from one in 11 in 2019

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Blackrock’s boss has warned of a global pensions crisis as people live longer but cannot afford to pay for it.

In his annual letter to investors, Larry Fink said, “As a society, we spend an enormous amount of energy helping people live longer.

“But not even a fraction of that effort is spent helping people afford those extra years.”

He cited figures showing that one in six people will be over 65 by mid-century, compared to one in 11 in 2019.

And he said the situation in his native America was so dire that companies and the government were effectively telling workers, “You’re on your own.”

Retirement shock: Blackrock boss Larry Fink cited figures showing one in six people will be over 65 by mid-century, up from one in 11 in 2019

Retirement shock: Blackrock boss Larry Fink cited figures showing one in six people will be over 65 by mid-century, up from one in 11 in 2019

Fink argued that capital markets – in other words, investments in stocks and bonds – could provide the answer “as long as governments and companies help people invest.”

He said governments worldwide should prioritize creating the kind of “robust” capital markets that the US already has.

But even in America, a “pension crisis” is looming, and the Social Security Administration has warned that it may not be able to pay people their full benefits after 2034.

Fink said “economically anxious” younger people believed older generations were “focusing on their own financial well-being at the expense of who would be next.”

“In the case of retirement, they are right,” says Fink (71).

“Today in America, the retirement message that the government and corporations are telling their employees is basically: ‘You’re on your own.’

“And before my generation disappears completely from positions of business and political leadership, we have an obligation to change that.”

Fink said that, like the 2008 financial crisis, it should be seen as a problem “so big and so urgent that government and business leaders stop doing business as usual” and “step out of their silos and sit around the same table to find a solution’. solution’.

The comments reflect the demographic issues that politicians around the world are grappling with.

In Britain, these problems are being partly addressed by raising the retirement age.

And even if they have to work longer, it is increasingly unlikely that most retirees will receive a generous workplace pension, as they must instead hope that the pension pots they have saved into over their working lives will be large enough to cover their living expenses provided. for them.

However, public sector workers continue to enjoy state-backed, gold-plated pensions. Meanwhile, Chancellor Jeremy Hunt promised this weekend that the state pension would continue to rise through the so-called ‘triple lock’.

That means it will rise every year at the rate of average earnings growth, inflation or 2.5 percent – ​​whichever is higher – despite question marks over the long-term costs.

Hunt told the BBC’s Sunday with Laura Kuenssberg that he was confident the “expensive” promise would be paid for by growing the economy.

Former Pensions Minister Ros Altmann said: ‘The most important issue is helping people to plan their working lives differently and to continue working longer if possible, while also removing remaining age discrimination in the labor market.’

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