By Bob Santella, Chief Executive Officer, IPC
Pension funds cumulatively hold about $40 trillion globally, making them the largest category of asset owners in the world. And yet, demand is still growing for pensions due to important changes in demographics; put simply, the world is getting older. In the U.S., people over 65 will account for more than one-fifth of the population within the next 40 years. In Europe, they already do, and that percentage is projected to increase. The importance of pensions and their proper stewardship cannot be overstated.
So it warrants attention that modern pension fund managers face an investment landscape far more complex than ever before. For example, some recent developments that are geographically regional offered no easy answer for allocators, such as the implications and uncertainty surrounding Brexit for pensioners in the United Kingdom. In continental Europe, the effects of the unwinding of quantitative easing are equally offering a big unknown. In the U.S., many state and local pensions face tough decisions for a litany of reasons, all while protectionism is rising around the world. Fund managers responsible for navigating these hurdles are responding in two ways — strategically and technologically.
Depending on the size and composition of the pension, how managers are strategically pivoting varies, but in general there have been glimmers of a returning preference for active management after a long period when index funds were favored. This shift in momentum is partially attributable to the return of volatility in capital markets — yet more change to which managers must adapt. Another recent tactic fund managers have been adopting is taking bolder steps back into real estate as pensions seek to bolster alpha.
Pensions are also looking to the Fintech sector to help improve returns. Opportunities abound in the application of big data, artificial intelligence, machine learning, and other emerging innovations. For instance, new auto-enrollment programs have been created with smaller plan sponsors in mind, so that every employee has equal access to pensions regardless of their individual resources. On the other end, smart risk-management software helps level the playing field among managers so that they don’t need a supercomputer to traverse the aforementioned market complexity. Furthermore, regulatory compliance and security requirements are enormous sources of overhead costs for any pension fund big or small. A single, unified platform can greatly improve both costs and efficiency on this front.
IPC is empowering pension managers with Unigy 360, enabling them to gain a significant strategic advantage. Many pension managers have implemented our cloud-based software-as-a-service solution because regardless of fund scope they can access one of the world’s largest and most diverse financial ecosystems. All regulated users on the team, from portfolio managers to compliance professionals, technologists, and operations staff, can leverage Unigy 360 for mission-critical external communications and internal workflows.
Pensions safeguard people’s nest eggs for when they are needed the most, and given these funds continue to grow globally, they’ve been a point of focus for IPC. We’ve seen firsthand how pension managers who implement IPC’s offerings are better able to respond to often opaque conditions, and how Unigy 360 can serve as a powerful catalyst for addressing the most daunting communications and workflow needs in global finance, so that even if market conditions aren’t always clear, the way pension funds can react and manage the future for retirees’ investments is.
What does your second act look like? Thousands of people retire globally every day. IPC’s Unigy 360 plays a key role in helping the world’s pension funds fulfill client retirement goals.
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© 2018 IPC Systems, Inc. All Rights Reserved. The contents of this publication are intended for general information purposes only and should not be construed as legal or regulatory advice.