Improvements to pension systems have made them better placed to deliver pensions

Pensioner 2018

(Unsplash, 2018)

This article is brought to you in association with OECD.


Improvements in the design of pension systems over the last decade in OECD countries have made them more financially sustainable and governments should now focus on ensuring they provide people with an adequate retirement income, according to a new OECD report.

The OECD Pensions Outlook 2018 says that governments face challenges including population ageing, low returns on retirement savings, low growth, less stable employment careers and insufficient pension coverage among some groups of workers. These issues have eroded the belief that pension systems, pay-as-you-go or funded, will deliver on their promises once workers reach retirement age.

“Pension reform remains a continuing challenge as countries need to ensure people get an adequate pension while remaining affordable,” said OECD Secretary-General Angel Gurría, launching the report in Paris.

Many countries have introduced automatic mechanisms to adjust pension benefits to economic and demographic developments, as well as default options to help people that do not want to or cannot make choices. Countries have also taken measures to strengthen safety nets to prevent old-age poverty, says the report.

Regulators and policy makers have also taken steps to make regulatory and supervisory frameworks for funded pension arrangements more robust to make sure they manage people’s savings in their best interest.

Report main messages

  • Combining funded and pay-as-you-go pensions, automatic mechanisms, and a strong safety net for pensioners improves retirement outcomes.
  • To improve the design of financial incentives to save for retirement, tax rules should be straightforward, stable and consistent across all retirement savings plans. Aligning charges levied by pension providers on scheme members with the cost of managing retirement savings requires better disclosure, pricing regulations and structural solutions.
  • The regulatory and legal frameworks of pension funds should be at arm’s length from government. Pension funds should have clearly stated missions to guide investment policy; an oversight board that is accountable to the competent authorities and to members; and transparency about their governance arrangements and their investment and risk management to keep them accountable to different stakeholders.
  • Automatic features, default options, simple information and choice, financial incentives and financial education can result in better retirement outcomes, given that low levels of financial knowledge and behavioural biases can lead people to make unsuitable decisions for retirement.
  • Increased flexibility around retirement age and progressive public pensions and tax rules partly address financial disadvantages in retirement of population groups with shorter life expectancy. Policies to improve the sustainability of pension systems in light of increases in life expectancy will need to consider how those in different socioeconomic and gender groups may be affected.
  • Survivor pensions still play an important role in smoothing living standards after a partner’s death. However, they should not redistribute from singles to couples or limit incentives to work.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

The Eurogroup has set Cyprus on fire

On International Youth Day the European Youth Forum calls for true youth participation

‘Air bridge’ vaccination operation begins for Ebola-hit communities in DR Congo

Samsung’s profits fall as cheaper smartphones gain market share

Landmark agreement will protect 100 European Geographical Indications in China

This man swam under the East Antarctic ice sheet to highlight the impact of climate change

COVID-19: MEPs free up over €3 billion to support EU healthcare sector

How poor countries can deal with the economic shock of COVID-19

Merkel, Mercedes and Volkswagen to abolish European democracy

G20 LIVE: “This was not an attack against France, this was an attack against the universal human values!”, EU President Juncker cries out from G20 in Antalya Turkey

Rule of law in Hungary: Parliament should ask Council to act, say committee MEPs

EU budget: Commission takes steps to make €11.5 billion available for crisis repair and recovery in 2020

Africa’s Sahel must be a top priority for UN peacebuilding efforts, says commission

For how long will terror and economic stagnation be clouding the European skies?

Now doctors can manipulate genetics to modify babies, is it ethical?

Mental Health: starting with myself

Efforts to save the planet must start with the Antarctic

Wide-ranging reforms needed to ensure Italy’s economic recovery

Can a package from China cause Coronavirus infection? Debunking the top 7 Coronavirus myths!

How to build a paradise for women. A lesson from Iceland

Solidarity Corps: more opportunities for young people

The succesful cooperation

Clean energy will do to gas what gas has done to coal

Where EU air pollution is deadliest

COVID-19: What to know about the coronavirus pandemic on 6 April

Turning Europe into a giant wind farm could power the entire world

Businesses succeed internationally

4 reasons cities should embrace Universal Basic Income

Amid troop build-up in Rohingya’s home state, UN appeals to Myanmar for peaceful solution

Brexit talks: 2nd round fails to bring the EU and the UK closer on key issues

Young students envision turning Europe into an Entrepreneurial Society

Permanent structured cooperation (PESCO) on the table of NATO Defense Ministers amid US concerns

Commission proposes to top up support for refugees in Jordan, Lebanon and Turkey

3 things you need to know about securing a blockchain

EU Commission – US hasten talks to avoid NGO reactions on free trade agreement

Youth Parliament to finalise millennials´ priorities for future of the EU

Tokyo 2020 Olympics: from cardboard beds to recycled medals, how the Games are going green

Amidst high trade tensions and policy uncertainty, UN cuts economic growth forecast

Germany fears that Americans and Russians want to partition Europe again

Banks worth $47 trillion adopt new UN-backed climate, sustainability principles

Why are the Balkans’ political leaders meeting in Geneva this week?

Greece may offer to China a European gateway

GSMA Announces New Speakers for Mobile 360 Series – Middle East and North Africa

Everybody against Germany over the expensive euro

Sustainable Development Summit: ‘We must step up our efforts – now’, Guterres declares

Bring killers of journalists to justice: UN agency seeks media partners for new campaign

“BEUC cautions against TTIP that would seek to align EU and US chemicals management frameworks”

France, Germany challenge Trump’s America on Iran and the reign of the dollar

Russia won’t let Ukraine drift westwards in one piece

US cities are going to keep getting hotter

Tax revenues have reached a plateau

How to make primary healthcare a favourable career choice for medical students: strategies and reflections

New York high school students are getting free water bottles to cut plastic waste

Digital IDs and the Digital Economy: the (still) missing link?

Workers want flexibility. After COVID, they just might get it: Poll

3 things to know about women in STEM

The EU tells the bare truth to the UK that there is no such thing as easy divorces

European Citizens’ Initiative: Commission registers ‘End the Cage Age’ initiative

Road to Brexit: the UK seeks early agreement on Data Privacy with the EU

Court of Auditors: MEPs back five members

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s