By Charlie Conchie
The boss of the world’s biggest asset manager Blackrock has warned of a looming “crisis” for global pension savers today as he called on global leaders to rethink the “conception of retirement”.
In his annual letter to investors, Larry Fink, who founded and runs the $10trillion dollar asset manager, said that retirees globally were threatened by a lack of cash to support them and global policy makers had neglected the importance of pension savings.
“As a society, we focus a tremendous amount of energy on helping people live longer lives,” Fink wrote. “But not even a fraction of that effort is spent helping people afford those extra years.”
Fink added that the US and western economies faced a “retirement crisis”, citing UN projections that one in six people globally would be above the age of 65 by 2050, up from one in 11 in 2019.
The annual letter from the Blackrock chief is closely watched among investors globally and signals the priorities for the New York-based money management behemoth. In previous years Fink has championed the cause of environmental, social and governance investing and discussed the benefits of crypto.
In his letter today, the billionaire executive issued a rallying cry for the use of capital markets as a means for saving for old age and called on corporate and political leaders to take action to address the crisis.
“Maybe once a decade, the U.S. faces a problem so big and urgent that government and corporate leaders stop business as usual. They step out of their silos and sit around the same table to find a solution,” he wrote, adding the business leaders now “need to do something similar for the retirement crisis”.
Over half of Blackrock’s $9trillion in assets are retirement cash, with the firm managing around a quarter of the total US workers’ pension savings.
The warnings point to a global shift in pension policy away from defined benefit savings models, in which workers are paid out a set amount in retirement, to defined contribution, in which savers pay into their pension fund throughout their time in work.
Fink warned that the change signalled “a shift from financial certainty to financial uncertainty”, adding “I don’t have all the answers”.
The pension warnings came amid calls for “energy pragmatism” to drive the transition to a cleaner economy. The topic has been contentious for Blackrock over the past three years.
The firm has been hit by a series of bruising run-ins with US investment funds in Republican run states over its ESG stance, with Fink saying last year Blackrock had lost around $4bn as a result of the political backlash, a figure dwarfed however by net inflows to the firm.
