Photo: Bloomberg TV
Recent polls show anxiety about retirement is surging.Larry Fink, CEO of BlackRock, says companies must now respond accordingly.
“Companies have a moral responsibility to help both full-time and part-time employees to save enough,” he wrote today in the Financial Times.
“That responsibility is not absolved when companies shift from defined benefit to defined contribution plans. With either type of plan, employers should provide more transparency about the income employees can expect in retirement.”
The classic 60/40 mix of stocks and bonds, he says, no longer delivers the returns employees need at today’s low yields. To correct declining returns, Fink says pension funds should end restrictions on investing in commodities, real estate and other alternative investments.
To promote confidence in such moves, he said, regulators should protect the collateral posted as futures trades clear. The Commodities Futures Trading Commission just began doing this for over-the-counter derivatives, he notes.
Finally, Fink calls for restructuring the capital gains tax to kick-in after three years instead of 12 months, with the rate declining the longer an investment is held.
“The corporate sector needs to be willing to make concessions to achieve that goal,” he adds.