The OECD Pensions Outlook provides an analysis of different pension policy issues in OECD countries covering both public and private, defined benefit and defined contribution, pay-as-you-go and funded retirement provisions. Prepared against the backdrop of the COVID-19 pandemic, this fifth edition discusses policy guidelines to help governments strengthen the resilience of their retirement savings and old-age pension systems. It is complemented by a report on Retirement Savings in the Time of COVID-19 which provides a more in-depth analysis of the initial impact of the pandemic on retirement savings and old-age pensions, with a greater focus on the former where contributions are invested in capital markets to finance future retirement benefits.

COVID-19 has dealt an unprecedented shock to the labour markets and pension arrangements across the world. Policy makers have acted swiftly to address many of the ensuing challenges. Many countries have extended job retention schemes and unemployment benefits, allowing workers to keep accruing entitlements in public pension schemes and, to some extent, in retirement savings arrangements. Similarly, governments took a range of regulatory measures to ensure the sustainability of retirement savings arrangements, such as flexibility around recovery plans, as well as communication campaigns to encourage people to maintain their investments in retirement portfolios to avoid selling and materialising value losses, and to raise awareness of scams, which COVID-19 may have exacerbated.

The broadened coverage of job-retention schemes and unemployment benefits has lowered the transmission of the labour market slump to public pension entitlements, but the newly accumulated debt will add pressure on pension finances, already strained by demographic changes.

This chapter assesses the impact of COVID-19 on retirement savings and old-age pensions, and examines the measures put in place in OECD and selected non-OECD countries. The chapter also considers the conditions under which pension providers may invest the savings earmarked for retirement to support the economy, taking into account their fiduciary duty to invest in the best interest of members. The chapter provides policy guidelines to assist countries in addressing shocks like COVID-19.

This chapter introduces a framework for assessing the adequacy of retirement income. That framework involves having clear adequacy objectives, calculating adequacy indicators, comparing those indicators to clear targets, and assessing overall adequacy with reference to policy goals. The chapter proposes tangible actions for policy makers to apply this framework.

This chapter discusses policy options to increase the role of retirement savings plans for workers in non-standard forms of work, based on the experience of OECD and non-OECD countries. It first describes the characteristics of workers in non-standard forms of work and the implications for their ability and capacity to save for retirement. It then identifies gaps in their retirement income protection given the current balance between public and private provisions. The chapter ends with policy options, distinguishing different categories of workers in non-standard forms of work, to encourage them to join and regularly contribute to retirement savings plans.

This chapter provides a framework to assist policy makers in selecting default investment strategies for defined contribution retirement savings arrangements. It describes how to use a stochastic model to assess investment strategies with respect to the objective of maximising retirement income, and discusses the key parameters of the stochastic model that need to be considered. It finally provides guidance to assist countries in using the framework.

This chapter provides options to policy makers to address the potential negative consequences of frequent switching of investment strategies within defined contribution retirement savings arrangements. It discusses the drivers and impacts of frequent switching. It also provides an overview of how jurisdictions are approaching this problem and the measures that they have taken to limit the negative impact of switching.

This chapter explores how retirement income arrangements can distribute risks among participants and providers, and the implications that design and regulatory features have on who bears those risks and the level of retirement income they can provide. It first discusses the benefits of collective risk sharing in terms of individual risk mitigation and what this means in terms of fairness for participants. It then looks at how valuation and funding requirements can help to ensure the continuity of the arrangement. It also presents the different approaches to securing any guarantees that the arrangement offers and looks at what drives their effectiveness. It concludes with a discussion on how the regulatory framework can support the objectives of fairness, continuity and security to promote sustainable risk sharing in retirement income arrangements.

This chapter provides policy makers and pension plan providers with guidance on how to communicate about investment strategies to help members compare their options. It offers an overview of the practices in place in different countries to communicate about different investment strategies. It discusses the merits of different approaches and proposes policy options to ensure members can effectively use the information received to compare their investment options and choose an investment strategy that is appropriate for them given their preferences and personal circumstances.