A 2008 economic and pension forecast from Mercer says that although little has changed in the pension world in three decades, the years to come will be anything but ordinary. “The speed of change is expected to increase in the next few years,” said Scott Clausen, head of Mercer’s executive retirement group.

Mercer surveyed the views and predictions of 54 leading Canadian and global institutional investment managers. The results were presented in Toronto earlier today.

According to the forecast, 2008 will see defined benefit (DB) sponsors begin to shift focus to financial risk management as well workforce strategies to retain employees seeking retirement. Mercer predicts employers will begin to reduce early retirement benefits and instead, introduce plan enhancements such as phased retirement. In light of these changes Clausen admitted “the next few years will be challenging.”

In order to reduce financial risk, Clausen added that employers should seek strategies that increase funding and decrease short-term volatility and long-term costs.

As for the economy, David Kaposi, a principal with Mercer’s investment consulting business, announced that the cost of oil should end the year at US$85/barrel. The strong Canadian dollar is expected to finish 2008 on par with the U.S. dollar.

Another aspect that will remain unchanging: the credit crunch. Mercer’s forecast shows that subprime credit issues will continue to have an impact on markets this year.

For Mercer’s outlook on equities, click here to read Modest Equity Performance Expected in ‘08.

To comment on this story, email kirstyn.brown@rci.rogers.com.

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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