OECD Issues Call for Better Protection of Occupational Pension Systems

Member countries of the Organisation for Economic Co-operation and Development (OECD) have agreed on new guidelines for governments and regulators designed to improve how certain types of pension funds are run with a view to making employees’ pensions more secure. The OECD Guidelines on Funding and Benefit Security in Occupational Pensions contain a series of recommendations concerning regulation of the funding of occupational pension plans, and in particular defined benefit pension schemes.

Issues covered by the guidelines include the funding and valuation of pension plans and protection of employees’ interests in company pension schemes in the event of their employer or the company that manages their pension plan going bankrupt. The guidelines also call on tax authorities to consider raising maximum funding levels, so as to allow pension funds to build up reserves that will protect them against a downturn in asset values.

According to OECD Secretary-General Angel Gurría, “[p]eople are living longer and need to be sure that their pensions are safe.” The guidelines "will be helpful to OECD countries to ensure that occupational pension plans offer secure retirement benefits to their members.”

Source: OECD News Release (May 10, 2007)