IOPS Recognises the Importance of DC Pensions Internationally
September 11, 2008
The International Organisation of Pension Supervisors (IOPS) has recognised the increasing importance of DC pensions in a new series of working papers.
Following on from a successful initial series of papers, which focused on the use of education and risk based regulation, the new set of papers has marked a strong shift of focus to DC pensions. The papers have been drafted by a number of members - including from the UK Pensions Regulator, Italy, Chile and Hong Kong - providing a wide range of international experience. These papers represent the views of the IOPS membership as a whole rather than the views of any individual regulator (i.e. the UK Pensions Regulator). They reveal that:
globally the shift towards DC pensions plans has been the key trend in the field of private pension provision.
there is a widespread international concern on whether the provision of information to members is truly successful in empowering them to take appropriate actions. In fact, the complexity of the decision-making process within DC plans is thought to be prohibitive for the great majority of members.
default funds can and arguably should be used as a substitute for the provision, (and the processing), of complex information by members.
the fees charged on DC schemes are higher in voluntary systems, decline over the time and are lower where there is a small number of providers.
the UK Open Market Option (OMO), plays an important role in decisions relating to retirement income and can help insure that members get the best annuity option.
Philip Diamond, UK Pensions Regulator International Adviser and IOPS UK delegate and treasurer, said: "IOPS answers a real need among pensions regulators worldwide to share experiences and knowledge. The Working Paper Series continues to react to changing conditions by producing insightful and useful framework models to guide the successful implementation of DC schemes."
Although the UK Pensions Regulator does not take a view on the types of pension provision offered by employers, it does recognise that there is a shift towards DC pension provision.
IOPS is an independent international body representing those involved in the supervision of private sector pension arrangements. It has around 60 members and observers representing approximately 50 countries and territories worldwide, including the UK Pensions Regulator. One of its key missions is to undertake and communicate research on best practice.
Information on World Pension Issues
Copyright © Global Action on Aging