What Happened to the American Pension?

Goldman Sachs Exchanges

Goldman Sachs

Business

4.4 • 1K Ratings

🗓️ 11 June 2018

⏱️ 26 minutes

🔗️ Recording | iTunes | RSS

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Summary

Fifty years ago, if you asked Americans how they mainly saved for retirement, chances are they'd answer: "my pension." That's no longer the case. After surging in the post-World War II years, corporate pensions have been on the decline in the US over the past couple decades, largely driven by a stricter regulatory environment and long period of low interest rates, says Goldman Sachs' Michael Moran. With fewer corporations offering comprehensive pension plans, Moran says it will be up to individuals to carry the burden of retirement savings. "It's going to be falling on a lot of individuals in terms of saving for retirement, investing money themselves and then realizing how long they're going to have to use that money in retirement." This podcast was recorded on April 13th, 2018. The views and opinions expressed herein should not be construed as an offer to buy or sell any securities and such views and opinions may differ from those of Goldman Sachs Global Investment Research or other departments or divisions of Goldman Sachs and its affiliates. This information may not be current and Goldman Sachs has no obligation to provide any updates or changes. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. Goldman Sachs is not providing any financial, economic, legal, accounting or tax advice in this podcast. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by any Goldman Sachs entity. The portfolio risk management process includes an effort to monitor and manage risk but does not imply low risk. Copyright 2018 Goldman Sachs & Co. LLC. All rights reserved.

Transcript

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0:00.0	This is a
0:09.0	exchanges at Goldman Sachs, where we discuss developments currently shaping markets, industries,
0:13.9	and the global economy. I'm Jake Stewart, global head of corporate communications here at the firm.
0:18.0	Today we're talking about what's going on with pensions. It used to be the pensions with the way most Americans saved retirement.
0:23.5	That's not the case anymore. To understand why that is and a whole lot more, we're joined by Mike Moran,
0:28.8	a pension strategist in Goldman Sachs Asset Management, who's recently come out with some proprietary findings on the pension landscape.
0:35.5	Mike, welcome to the program.
0:37.0	Great to be here, Jake. Thanks for having me.
0:38.5	When we hear the word pensions, what are we actually talking about? Help us understand the pension landscape today between defined benefit, defined contribution, and the rest.
0:47.0	When we talk about pensions, I think for a lot of people, when they hear the word pension, they think about their 401k the defined
0:53.7	contribution plan that many individuals have today as part of their employment.
0:57.4	What we're really talking about here today are defined benefit plans and these are
1:02.1	plans that used to cover a lot of
1:04.0	individuals who work for companies as well as sometimes in the governmental
1:07.7	sector where you would work for that employer for a long period of time and
1:11.5	then when you retired they would send you a monthly check.
1:14.7	You'd get $3,000 or $2,000 every month starting at let's say age 65 through the end of your life.
1:21.0	So what we're really focused on today is the defined benefit part of the
1:24.0	retirement market and in particular corporate pension plans.
1:28.3	How many Americans roughly get covered today by defined benefit contribution, defined benefit plans.
1:34.6	A lot less than in the past.
1:35.7	So when we think about it between the public sector
	...

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