29/04/2008 - Many people have a poor understanding of the financial issues that affect their lives, according to OECD analysis. To help them, OECD countries have agreed new good practices on financial education relating to private pensions and insurance that call on governments and business to work together to improve financial literacy in order to give people the tools they need to secure their future.
“We need to find a better balance between the increasing complexity of financial products and services and people’s capability to understand them,“ said André Laboul, head of OECD’s Financial Affairs division. “Every cent or penny invested by governments and business in raising awareness and education today will make a huge difference in years to come.”
Surveys conducted in OECD countries and some non-member economies show that people often overestimate their understanding of risks and are typically not saving enough to secure an adequate retirement income. With the growing shift to defined-contribution pension schemes in OECD countries, which transfer longevity and investment risks to households, better financial education and awareness is essential to assure an adequate level of retirement income for millions of individuals.
Building on the OECD principles on financial education and awareness released in 2005, the good practices say that governments have a responsibility to educate and promote a “culture” of financial responsibility among their citizens and, in particular, young people.
The pensions and insurance industry should make financial education central to its governance responsibilities to customers and investors. Steps they should take range from using simple, jargon-free language to providing unbiased information and advice that are clearly distinguished from marketing, promotion and advertising. Media campaigns to raise awareness of pensions and insurance issues and risks should be run, notably targeting vulnerable people such as immigrants or those with few savings.
The good practices, related to private pensions and insurance, will be presented at an international conference which is open to the media, organised by OECD and the US Treasury, in Washington D.C, from 7 to 8 May 2008. Government officials and experts from national authorities and regulatory and supervisory bodies, as well as senior private sector representatives and academics from OECD and non-OECD countries, will attend.
To promote enhanced visibility and co-operation on financial education , the OECD has launched a new website, the OECD International Gateway for Financial Education, www.financial-education.org, designed to act as a central international source of information on the issue. The Organisation has also set up an international network of public experts on financial education, which will meet for the first time in Washington D.C. on May 6, in advance of the conference.
For further information or to register for the conference, journalists should contact Spencer Wilson in the OECD’s Media Division (tel. + 33 1 45 24 81 18).
More details on the conference, including the agenda, are available at http://www.oecd.org/document/15/0,3343,en_2649_33761_40056207_1_1_1_1,00.html
Further information on OECD’s work on financial education is available at www.oecd.org/daf/financialeducation