Changes to the international regulatory regimes on pensions and investments is set to boost global retirement business and help to achieve double-digit growth in some cases, a Cerulli report has said.
In its 528-page annual report, Global Markets 2014, Clarity and Consolidation in the Quest for Assets, Cerulli researchers found that the retirement business was becoming considerably attractive globally.
It said that regulatory changes such as the implementation of auto-enrolment in the UK and abolition of compulsory annuitisation would help innovative providers to take advantage to their benefit, as well as drive an increase in saving.
Ken Yap, a director at Cerulli Associations, said: “The mix of the market size and a 12.2 per cent compound annual growth rate for retirement assets in 2013 has already made the UK attractive for managers.
“Auto-enrolment continues to attract millions more savers into Pillar ll pensions. And the abolition of mandatory annuitisation for pensioners from 2015 means they can stay in investment products.”
The US, UK and Australia are the main markets of 27 countries surveyed over four years to 2013. Six countries saw an occasional fall in retirement assets.
Globally, Cerulli has predicted an average CAGR of 7 per cent over the next four years to 2018, driven also by Asia’s economies.
Adviser view
John Broome Saunders, actuarial director for London-based Broadstone Pensions and Investments, said: “I am not sure how much effect auto-enrolment will have in the UK, as contribution levels are small.
“However, what we may see is that the flexibilities being introduced in April 2015 might increase the amount of pension money that remains invested, rather than being locked into expensive annuities.
“As for Asia, diversification into these markets has been a theme in investment for a while, as this is where the economic growth will be in the longer term.
“Therefore, pension investors need to be exposed to these markets.”