More efficient capital management could help pension funds strained by longer life expectancy

Canadians are living longer than ever. Life expectancy at retirement has increased by about four years since 1980. This creates a cash crunch for pension funds. Increasing current plan members contributions is one way to address this, but more efficient capital management can help too. Pension funds have a distinct advantage over other investors, argues Prof. Sebastien Betermier in Policy Options. Many of their liabilities are not due for decades, which allows pension funds to weather short-term market fluctuations and implement strategies that earn high returns over the long run.