Social and welfare issues

 What impact has the crisis had on pensions?
The largest impact to date has been on private pension schemes which have seen an average decline of over 23% or USD 5.4 trillion in their investments across the OECD, according to the new OECD report Private Pensions Outlook. Two thirds of the losses (USD 3.5 trillion) are estimated to be in the United States alone, with the United Kingdom, Australia, Canada, the Netherlands, and Japan accounting for a further USD 1.4 trillion.

Pension funds, which account for most private pension assets, have been hit hardest in OECD countries where equities make up over a third of total assets invested. Irish pension funds experienced the worst investment performance, losing 33% of their value in real terms.

Occupational defined-benefit schemes are adding to the pressure that the crisis is already putting on companies; many employers are finding it increasingly difficult to finance the pension promises made to their current and former employees.

Public pension schemes are also starting to feel the effects of rising unemployment rates, falling wages and, consequently, a decline of contribution revenues.
 Who is affected?
People close to retirement or who have just retired in countries where private pensions provide a large part of retirement income. Often these are middle and high-earners as low-income workers have less capacity to build up retirement savings.

Among these, those most affected are in defined contribution plans, as pension benefits in these arrangements depend on the market value of the investment portfolio at retirement. Countries in this situation include Australia, Canada, Ireland, the United Kingdom and the United States. In Australia and the US, for example, many retirees keep very large shares of their pension savings in equities whose value has fallen sharply.
 What can be done?
Both private and public pension systems should be reformed. The immediate challenge for governments is to prevent old-age poverty from rising. Most OECD countries have publicly-financed old-age safety-nets in place. But in some countries, these anti-poverty provisions are very low. Finland, Germany and Japan, for example, should bolster their old-age safety-nets.

Private pension funds should be managed better. They should be more transparent and better regulated. Their governance and risk management need to be much improved. Policymakers also need to introduce regulations and incentives that reduce the risk that individuals are exposed to as they get older. Governments and industry need to invest more time and money in financial education for people.

=> For analysis of the impact of the crisis on private pensions, see Pensions Markets in Focus (pdf).
=> Data on private pensions is available in Private Pensions Outlook.
=> For more on OECD work on private pensions, click here and on public pensions here.

 

 

Countries list

  • Afghanistan
  • Albania
  • Algeria
  • Andorra
  • Angola
  • Anguilla
  • Antigua and Barbuda
  • Argentina
  • Armenia
  • Aruba
  • Australia
  • Austria
  • Azerbaijan
  • Bahamas
  • Bahrain
  • Bangladesh
  • Barbados
  • Belarus
  • Belgium
  • Belize
  • Benin
  • Bermuda
  • Bhutan
  • Bolivia
  • Bosnia and Herzegovina
  • Botswana
  • Brazil
  • Brunei Darussalam
  • Bulgaria
  • Burkina Faso
  • Burundi
  • Cambodia
  • Cameroon
  • Canada
  • Cape Verde
  • Cayman Islands
  • Central African Republic
  • Chad
  • Chile
  • China (People’s Republic of)
  • Chinese Taipei
  • Colombia
  • Comoros
  • Congo
  • Cook Islands
  • Costa Rica
  • Croatia
  • Cuba
  • Cyprus
  • Czech Republic
  • Côte d'Ivoire
  • Democratic People's Republic of Korea
  • Democratic Republic of the Congo
  • Denmark
  • Djibouti
  • Dominica
  • Dominican Republic
  • Ecuador
  • Egypt
  • El Salvador
  • Equatorial Guinea
  • Eritrea
  • Estonia
  • Ethiopia
  • European Union
  • Faeroe Islands
  • Fiji
  • Finland
  • Former Yugoslav Republic of Macedonia (FYROM)
  • France
  • French Guiana
  • Gabon
  • Gambia
  • Georgia
  • Germany
  • Ghana
  • Gibraltar
  • Greece
  • Greenland
  • Grenada
  • Guatemala
  • Guernsey
  • Guinea
  • Guinea-Bissau
  • Guyana
  • Haiti
  • Honduras
  • Hong Kong, China
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Iraq
  • Ireland
  • Islamic Republic of Iran
  • Isle of Man
  • Israel
  • Italy
  • Jamaica
  • Japan
  • Jersey
  • Jordan
  • Kazakhstan
  • Kenya
  • Kiribati
  • Korea
  • Kuwait
  • Kyrgyzstan
  • Lao People's Democratic Republic
  • Latvia
  • Lebanon
  • Lesotho
  • Liberia
  • Libya
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Macao (China)
  • Madagascar
  • Malawi
  • Malaysia
  • Maldives
  • Mali
  • Malta
  • Marshall Islands
  • Mauritania
  • Mauritius
  • Mayotte
  • Mexico
  • Micronesia (Federated States of)
  • Moldova
  • Monaco
  • Mongolia
  • Montenegro
  • Montserrat
  • Morocco
  • Mozambique
  • Myanmar
  • Namibia
  • Nauru
  • Nepal
  • Netherlands
  • Netherlands Antilles
  • New Zealand
  • Nicaragua
  • Niger
  • Nigeria
  • Niue
  • Norway
  • Oman
  • Pakistan
  • Palau
  • Palestinian Administered Areas
  • Panama
  • Papua New Guinea
  • Paraguay
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Puerto Rico
  • Qatar
  • Romania
  • Russian Federation
  • Rwanda
  • Saint Helena
  • Saint Kitts and Nevis
  • Saint Lucia
  • Saint Vincent and the Grenadines
  • Samoa
  • San Marino
  • Sao Tome and Principe
  • Saudi Arabia
  • Senegal
  • Serbia
  • Serbia and Montenegro (pre-June 2006)
  • Seychelles
  • Sierra Leone
  • Singapore
  • Slovak Republic
  • Slovenia
  • Solomon Islands
  • Somalia
  • South Africa
  • South Sudan
  • Spain
  • Sri Lanka
  • Sudan
  • Suriname
  • Swaziland
  • Sweden
  • Switzerland
  • Syrian Arab Republic
  • Tajikistan
  • Tanzania
  • Thailand
  • Timor-Leste
  • Togo
  • Tokelau
  • Tonga
  • Trinidad and Tobago
  • Tunisia
  • Turkey
  • Turkmenistan
  • Turks and Caicos Islands
  • Tuvalu
  • Uganda
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • United States
  • United States Virgin Islands
  • Uruguay
  • Uzbekistan
  • Vanuatu
  • Venezuela
  • Vietnam
  • Virgin Islands (UK)
  • Wallis and Futuna Islands
  • Western Sahara
  • Yemen
  • Zambia
  • Zimbabwe