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Former Lehman Brothers Investor Believes Blockchain Technology Can Fix Broken Pension System Posted on : Aug 17 - 2018

A pension crisis is brewing across the globe and the problem is only getting worse. In America alone, many states do not have enough money to pay benefits promised to government workers. According to a recent report from The Pew Charitable Trusts, the shortfall across U.S. states grew by $295 billion between 2015 and 2016. In total, state pension plans had just $2.6 trillion to cover a cumulative liability of $4 trillion.

And the pension crisis is not just affecting America. The UK now has an estimated $4 trillion retirement savings shortfall, which has been projected by experts to rise 4% each year and reach $33 trillion by 2050. Other populous countries like China are also being hit hard, seeing pension expenses rise 11.6% to 2.58 trillion Yuan in 2016. The government was left with a 429.1 billion Yuan expense to cover the shortfall, according to data from the finance ministry.  Meanwhile, the World Economic Forum predicts that the pensions deficit will reach $400 trillion by 2050.

Anastasia Andrianova, a former Lehman Brothers private equity investor and Founder and CEO of Akropolis, has watched the pension crisis unfold firsthand. Not only has Andrianova been involved in the finance industry for years, but her Eastern European roots have allowed her to see what happens during times of economic difficulties.

“ When an economic crisis occurs, the first thing that a state will do is tap into pension funds or reserves. Both public and private funds are raided. I’ve seen this happen firsthand, which was further reinforced by the global financial crisis of 2007. The fast points of attack are typically pension services. Pension payouts are cut first. This affects people the worse,” Andrianova told me.

Blockchain Can Fix Broken Pension Sector

Following Andrianova’s time working with several pension funds, she started to notice several pain points impacting the pension system. Andrianova recently wrote on Global Banking and Finance Review,

The pensions system is simply no longer functional. Cost inefficiencies are decimating savers’ pots, mismanagement is rife, and programs are mired in complexity. Meanwhile, retirements are getting longer and more expensive as life expectancy rises. Individuals who have contributed to funds for decades are stuck in schemes which may not deliver their pensions. Meanwhile, alienated younger generations struggling with soaring rents and property prices aren’t saving enough for the future.

According to Andrianova, a lack of transparency is at the heart of the many problems facing current pension systems. One of the main benefits of blockchain technology is its ability to provide increased transparency and efficiency. Taking a firm belief that the current pension system is too far-gone, Andrianova founded her company, Akropolis, last year.

Currently, Akropolis is working on building a protocol to provide a blockchain-based infrastructure to decentralize pensions. The platform aims to gather fund managers, institutional users, individual users and developers under a single ecosystem to provide increased transparency for pension funds. This would also cut out the middlemen that could potentially take value out of pension investments. View More