Funded and private pensions
Improving the design of retirement saving pension plans
Retirement saving pension plans (e.g. defined contribution plans) are increasingly an integral part of most countries’ overall pension system, while for some countries they are the main component of their pension system. Therefore, overall retirement income adequacy greatly depends on the pension benefits stemming from these plans.
This roadmap identifies elements of good design and public policy to assist countries to strengthen retirement income adequacy in an environment where pension benefits result from assets accumulated during working life.
Highlights of policy challenges and recommendations, March 2013
OECD roadmap for the good design of defined contribution pension plans
> Download recommendations (pdf)
The 10 recommendations in the roadmap were approved and endorsed by the OECD Working Party on Private Pensions in June 2012:
- Ensure the design of DC pension plans is internally coherent between the accumulation and payout phases and with the overall pension system.
- Encourage people to enrol, to contribute and contribute for long periods.
- Improve the design of incentives to save for retirement, particularly where participation and contributions to DC pension plans are voluntary.
- Promote low-cost retirement savings instruments.
- Establish appropriate default investment strategies, while also providing choice between investment options with different risk profile and investment horizon.
- Consider establishing default life-cycle investment strategies as a default option to protect people close to retirement against extreme negative outcomes.
- For the payout phase, encourage annuitisation as a protection against longevity risk.
- Promote the supply of annuities and cost-efficient competition in the annuity market.
- Develop appropriate information and risk-hedging instruments to facilitate dealing with longevity risk.
- Ensure effective communication and address financial illiteracy and lack of awareness.
Pablo Antolin (tel: +33-1 45 24 90 86 | firstname.lastname@example.org)
5 March 2013 - London, UK
Pension Markets in Focus
Mortality and life expectancy - Longevity risk
Retirement Savings Adequacy
Global pension statistics
Pensions at a Glance 2011