BASSETERRE, St. Kitts – WITH increasing unemployment and unfavourable economic conditions, the Organisation for Economic Cooperation and Development’s (OECD) biennial Pensions at a Glance 2009 report warns that there is a need for sweeping pension reforms.
As falling tax revenues continue to constrict public finances, governments around the world face significant deficits and marked reductions in growth which, according to the OECD report, leaves “little room for more generous public pensions”.
Pensions at Glance 2009 assesses the impact of the ongoing crisis on pensions and includes features on the incomes and poverty of senior citizens, recent pension reforms and on the coverage of private pension schemes. It also compares the elements of national pension systems of the 30 OECD countries.
According to the report, a number of countries have already had to cut back on future public spending on pensions. The report also urges governments to continue reforms to ensure that public and private retirement income provisions not only protect the socially vulnerable but must also be financially sustainable.
OECD Secretary-General Angel Gurria acknowledged that private pension schemes have also been adversely affected by plunging stock markets and maintained that the way they operate needs to change. The report promotes reforms that would include better regulation, more efficient administration, clearer information about risks and rewards of different options and an automatic switch to less risky investments as people near retirement.
“Reforming pension systems now to make them both affordable and strong enough to provide protection against market swings citizens will save governments a lot of financial and political pain in the future,” Gurría said.
Because pension provisions are subject to various uncertainties, the report states that diversifying pension remains the “right strategy” in the face of economic and financial risks.
