Pensions in trouble globally

The present global financial crisis has seen assets in private pension plans – which have become an important component of diversified retirement systems in member countries of the Organisation for Economic Co-ordination and Development (OECD) – fall by nearly 23%, or around US$5.4 trillion, between the end of 2007 and December 2008. They have likely fallen further since then, according to an OECD report on reform- and exit strategies for government interventions.

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The dangers of running short

The most appropriate way for annuitants to improve the odds of living a comfortable life is to gain understanding of the likely outcomes they may experience. The only factor that can directly be controlled by annuitants is their withdrawal rate. Therefore, the withdrawal rate may need to be adjusted over time as market conditions dictate, argues Matthew de Wet.

Read more: Negative markets and living annuitants