Since employers play a key role in supporting pension growth, policy-makers should consider their involvement when implementing pension reforms, according to a new report by the Organisation for Economic Co-operation and Development.
The report found OECD member countries can optimize employer involvement by reducing financial and administrative barriers that prevent employers from establishing pension plans, while allowing employers to tailor the design of their plan within a regulatory framework that ensures non-discriminatory treatment across employees.
It also recommended that policy-makers promote the use of behavioural strategies to foster participation and savings — such as the use of automatic features and matching contributions in defined contribution pension plans — and facilitate the delivery of financial education in the workplace.
The report also found pensions have grown in OECD member countries over the last 20 years, with total assets representing roughly 100 per cent of total OECD gross domestic product. In Canada, pension assets represent roughly 160 per cent of GDP.
“Strong retirement systems will be important to protect the living standards of our aging population as demands on these systems continue to grow,” said OECD Secretary-General Mathias Cormann, in a press release. “The challenges are global, with jurisdictions all around the world facing similar challenges in the context of lower growth, high inflation and financial market uncertainty, while responding to the implications of population aging.
“We will need to continue to develop and strengthen a multi-pillar system that combines different types of pension schemes that supplement one another and diversify risks.”