QUICK TAKE: Nicolas Firzli on the Upcoming G7 Pensions Future of Retirement e-Forum
3rd G7 Pensions Digital Forum, 15 & 16 September 2020: ESG, Inclusive Growth and the Future of Retirement
Nicolas J. Firzli is Director-General of the World Pensions Council (WPC), a Paris-based international association of public and private pension institutions, and an Advisory Board Member for the World Bank Group Global Infrastructure Facility (GIF).
GBV: Nicolas, the past six months took a terrible toll on employees and pensioners the world over, with tens of millions of workers having to dig into their pension savings, and temporary cessation of pension contributions by private sector employers and governments alike… We, as a society, may have to pay a heavy price later on, right?
NF: Yes. For now, it’s a race to the bottom of the ‘Maslow Pyramid’: many citizens and policy makers are looking for short-term fixes, simply trying to survive in the ‘Post-Covid Era’. And governments and central banks are coming up with trillions in direct and indirect subsidies for influential industries and/or political constituencies they care about…, except, it seems, for retirees and pension savers! Monetary complacency and ‘quantitative easing’ have reached unprecedented levels from Frankfurt (ECB) to Washington (Fed), further eroding the value of the fixed income holdings of pension funds and retirement saving schemes. When it comes to the financial sustainability of ‘the retirement promise’, we’re not far from reaching a point of no return in many nations.
GBV: You’re one of the original coiners of terms like ‘pension superpowers’, ‘the Canadian model’ and ‘infrastructure as an asset class’, which have become quite popular in the financial press since the onset of the Covid crisis: we now hear policy makers on both sides of the Atlantic say they’d like to ‘emulate Ottawa and Canberra’… In the US, Scandinavia and the UK, lawmakers are saying ‘large pension investors can help us rebuild better’, in a more ESG-conscious way. Is this really a turning point?
NF: Taking a cue from Canadian, Singaporean and Australian asset owners (probably the most advanced when it comes to portfolio construction and risk management), smart institutional investors will allocate more to non-listed assets: private equity, including venture capital, infrastructure (debt and equity), private credit and loans (competing in part with banks), forestry, farmland and real estate – see chart (circle size represents size of fund).
That historic realignment on the asset allocation front is happening precisely at the moment when ‘ESG is moving center stage’: even in once staunchly neoliberal jurisdictions like Texas, Alaska or Switzerland, the smart money is betting on renewable energy, greentech, social bonds, women’s empowerment, employee shareholding and board diversity: this is an irreversible trend towards the Age of Fiduciary Capitalism.
All these issues will be discussed next week at our upcoming World Pensions Council digital event titled ‘G7 Pensions e-Summit on ESG & The Future of Retirement’ co-chaired by the Rt. Hon. Nick Sherry, and organized with GBV.
There are still two dozen e-passes available for retirements experts and pension and insurance executives who may want to attend the conference.
GBV magazine is a conference partner.