Arab Today, arab today australias central bank chief warns retirees of risky investment future
Last Updated : GMT 21:50:13
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Australia's central bank chief warns retirees of risky investment future

Arab Today, arab today

Arab Today, arab today Australia's central bank chief warns retirees of risky investment future

Australia's central bank governor Glenn Stevens
Sydney - XINHUA

Reserve Bank of Australia (RBA) governor Glenn Stevens said on Tuesday that retirees around the world face risky investments to provide adequate income for their future.

Stevens said because official interest rates were at record lows, and government bonds were to remain low for a long time, retirees would find it difficult to generate adequate income.

"The key question is: how will an adequate flow of income be generated for the retired community in the future, in a world in which long-term nominal returns on low-risk assets are so low?" Stevens told a conference in Sydney.

"This is a global question. Just about everywhere in the world the price of buying a given annual flow of future income has gone up a lot.

"Those seeking to make that purchase now -- that is, those on the brink of leaving the workforce -- are in a much worse position than those who made it a decade ago. They have to accept a lot more risk to generate the expected flow of future income they want. "

Stevens said the issue was a major problem in Europe where interest rates are extremely low, and the situation may cause older people to take risky investments and lose their savings.

"Root causes seem to include distorted incentives coupled with an erosion of a culture that placed great store on acting in a trustworthy way," he said.

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