Abstract

In the wake of a dramatic financial crisis and with the first waves of baby boomers approaching retirement we hardly need to think about how best arrive at the pension funds' payout phase. This paper argues that there is a urgent need to raise retirement saving, to reduce defined contribution plan members' exposure to investment risks and to provide the financial industry with cheap and safe payout instruments. These challenges are also likely to call for a more active government role, that could take the form of minimal guarantees provided to pension funds and annuity providers at prices that compensate the risks.