The chief executive of the world's largest asset manager says the UK should copy Australia and make retirement saving mandatory with no option to opt out.
This is the only way to ensure citizens have enough money in their pension pots in light of increased longevity and low interest rates, he says.
“There is too much risk that people will either opt out, or not put enough away even if they remain in a plan,” said Larry Fink, chief executive of BlackRock, at a National Association of Pension Funds Investments conference in Edinburgh.
Fink said the UK had made progress with the National Employment Savings Trust and auto-enrolment initiatives, which are aimed at increasing individual saving against a backdrop of declining defined benefit plans.
A study by the Strategic Society Centre and the Institute for Social and Economic Research at the University of Essex found the opt-out rate for auto-enrolment in the UK was about 10%.
Fink also argued that defined benefit plans need to be more willing to invest in alternative asset classes if they are to close their deficits.
“Pensions managers will need to take a bold approach in order to meet liabilities – a greater willingness to explore alternatives, including hedge funds, and to explore more flexible, non-traditional bond funds,” he said.
©2014 funds europe