He defends the promotion of capitalization plans promoted by companies as a complement to the public distribution system
The Organization for Economic Co-operation and Development (OECD) is urging reforms of the pension system to improve its sustainability and cope with the aging of the population. addition to public delivery systems. In its latest ‘Pension Outlook’ report released this Thursday, the OECD warns that the current financial and economic uncertainty, as well as the rise in the cost of living, should not be used as an excuse to delay reforms that could jeopardize sustainability. improve. of public pension systems, as delaying them would “endanger the well-being of current and future pensioners”. “Diversifying sources of pension funding makes pension systems more resilient to challenges such as aging populations,” the report points out.
“Strong pension systems will be important to protect the living standards of our aging population as demand for these systems continues to grow,” said OECD Secretary General Mathias Cormann, whose challenges are global and national. in a context of slower growth, high inflation and uncertain markets. “We will need to continue to develop and strengthen a multi-pillar system that combines different types of pension plans that complement each other and diversify risk,” he added.
In this sense, the OECD report highlights the growth of capitalization pension schemes, agreements in which pension savings are invested in the accumulation of assets to fund pensions, whose total assets accounted for more than 100% of the OECD’s total GDP at the end of 2021.
Carmine Di Noia, the OECD’s director of financial and business affairs, argued that the development of these private plans has contributed to multipillar pension schemes “that complement, rather than replace, public pay-as-you-go pensions”. “This will enable diversification of sources of funding for retirement, making pension systems more resilient to the challenges they face, such as population ageing,” he stressed.
In this way, the OECD suggests that employers have an important role to play in offering these types of agreements in view of retirement, although it emphasizes the need to weigh the benefits against potential challenges, such as cost, complexity and administrative burden. . , to strengthen the role of companies.
Similarly, the OECD points out that improving the design of these also requires promoting low-cost and profitable deals that are reflected in the rates charged. In this sense, he explains that in Spain, custody fees charged in 2020 were 0.1% of assets managed for professional reasons (employment plans), compared to 1.0% of assets in private personal plans . However, he warns that policymakers and regulators should consider the impact that different fee structures can have on pension savers and providers.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
