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The OECD has just issued new guidance for private pension systems that calls for stronger regulation and better governance, based on lessons learnt from the financial crisis. While attention to date has focused on improving banking regulation, the OECD believes that now is also the time to strengthen regulation of private pension funds.
The OECD Core Principles of Occupational Pension Regulation lay out a blueprint for policymakers to improve the regulation and supervision of private pension systems, covering the various aspects of the operation of these systems, such as licensing, governance, funding, investment and the rights of pension plan members.
The Principles are supported by new guidelines on pension fund governance. The guidelines outline the need for pension funds to improve their risk-based governance structures and mechanisms which take into account the scale of the fund and the risk exposures, both in the short-term and long-term, as well as consideration of the pension fund’s potential market impact through its investment decisions. They recommend that employees are represented on pension fund boards and urges funds to ensure that their board members have the knowledge and expertise to fulfil their roles in making important investment decisions.
The OECD has also set out a methodology to assess the extent to which countries comply with the Principles. The methodology is currently being used to assess the regulatory and supervisory frameworks of the five candidate countries for OECD membership (Chile, Estonia, Israel, Russian Federation, and Slovenia).
Documentation
See the full text of the Principles here.
See the full text of the pension fund governance guidelines here.
See the results of the public consultation on the governance guidelines here.
See the methodology for assessing the implementation of the Principles here.
For comment or further information on the Principles and OECD work on private pensions, please contact Juan Yermo from the OECD’s Financial Affairs division (tel. + 33 1 45 24 96 62).
For more information on pensions: www.oecd.org/daf/pensions
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Essential data on investments, membership, benefits, and industry structure
