The shift of retirement provisioning responsibility onto individuals is creating new opportunities for the financial industry, according to the latest Sigma study published on Thursday by reinsurer Swiss Re. Greater personal responsibility represents the new reality in retirement planning, bringing with it long-term decisions regarding retirement income security, wealth transfer, and the financing of elderly care.
Pension systems in countries such as the US, the UK, and Australia offer the greatest flexibility to individuals. In the US, more than half of retirees chose to withdraw and self-manage their pension capital in 2018, compared to 10 percent in the year 2000. In the UK, a solid third, or 36 percent, withdrew their pension assets as capital rather than a lifetime income in 2024.
Meanwhile, the Sigma study classifies the Swiss pension system as a hybrid model where retirement income consists of a combination of statutory pension claims and funded occupational or personal savings. Similar systems exist in the Netherlands, Japan, and South Korea. Switzerland also exhibits an increasing share of occupational benefits drawn as lump-sum payments, pointing to a potential advice gap. Many pre-retirees and pensioners may be making complex decisions regarding pension withdrawals without adequate financial advice.
Life insurers must increasingly collaborate with banks, advisors, and other distribution partners who serve these clients, the study authors emphasize. Products and services must also be designed so that advisors and customers can easily understand them. The deployment of technologies like artificial intelligence can make consulting and processes more efficient, though individuals continue to rely on personal support for more complex decisions. The opportunity for insurers and their partners lies in using technology to make advice and insurance protection more accessible.
