What does "redistribution" mean in the context of occupational pension funds?
Since the introduction of occupational pensions in 1985, life expectancy has increased dramatically, while interest rates on capital markets have fallen significantly. At the same time, our society is ageing, which means that the ratio of retirees to active members is constantly increasing.
All of this means that pension funds are now struggling to finance their retirement benefits. This means that more and more assets are having to be redistributed.
With occupational pensions, there are two types of redistribution:
- Redistribution from active members to retirees
- Redistribution amongst active members.