While many plan administrators are using analytics to measure the financial sustainability of public pension plans1, few have done anything to measure whether the pension benefits are actually adequate enough to keep people out of poverty in their old age. The adequacy issue is on the minds of citizens, and it should be on the agenda for pension leadership.
According to respondents to the Accenture Global Retirement Services Survey, 83 percent say that they are worried about their financial situation after retirement, and 57 percent believe that their standard of living will drop when they stop working.2 Using analytics to report on pension adequacy may help to quell the anxiety of many who don’t think they will be financially comfortable during retirement years. Furthermore, it can help pension systems to understand the level of benefits they are providing in contrast to what citizens actually need. Ideally, this information will help pensions to prove to the public that they are fulfilling their mission of providing support for retirees.