Ageing and pension system reform: implications for financial markets and economic policies

September 2005

A report prepared at the request of the Deputies of the Group of Ten

Synopsis

The principal conclusions and recommendations are as follows:

  • changes under way in public and private pension schemes may increase significantly the influence of retirement saving and related capital flows in financial markets;
  • governments could help to facilitate the development and expansion of markets for undersupplied financial instruments that will be useful for retirement savings and the provision of pension benefits;
  • regulatory and supervisory developments should aim to influence and support the trend towards more rigorous risk management, greater transparency, and better governance at private pension funds, also by ensuring consistency between funding and prudential requirements and accounting standards;
  • tax rules should not hinder the build-up of funding buffers by private pension funds, but should avoid the abuse of tax deferrals; and
  • as risks are increasingly being shifted to individual households, protection of pension beneficiaries is an issue, and financial education and the provision of advice may need to be strengthened.