What's State Street Global Advisor's next big destination for expanding its retirement business?
The U.K. is where it's at, said Frederik Axsater, global head of defined contribution.
"The U.K. market is very interesting, it's rapidly evolving and growing," Axsater said. "Given our expertise and local knowledge, we feel we can make a big impact there."
Many factors make the U.K. an attractive market for defined contribution growth, Axsater explained. High cost has created "less appetite" for defined benefit plans among plan sponsors, he said.
In addition, the use of auto-enrollment has significantly driven up participation rates, Axsater said. He expects the U.K. market to double in size and the number of participants there to triple over the next half decade.
While retirement plans in the U.K. tend to be small-sized, the "inertia" of auto-enrollment and increased participation should drive the average plan to "become more institutional in their decision-making," Axsater explained.
"Over time, I would expect the U.K. market to become more like the Australian market, in that you get a defined contribution-dominated picture where you have a very high participation rate in their population. DC will be the main source of retirement income and their equivalent to social security," Axsater said.
