OECD urges governments to stand firm on pensions reform

Governments worldwide must continue to take action on pensions or risk a decades-long global pensions crisis, the Organisation for Economic Co-operation and Development (OECD) warned this week.

The OECD said new economic concerns created by the credit crunch must not deter governments from pursuing pensions reforms.

Dealing with short-term challenges by postponing reforms would prove disastrous in the long-term, the OECD said.

By contrast, reforming pensions now will save governments “financial and political pain” in the future.

The OECD’s 280 page pensions report, published this week, warned that “governments may be tempted by short-term expediency to backtrack on earlier reforms by relaxing rules for early retirement as labour-market conditions worse.”

“The short-term political pressures on governments to respond are huge,” the report said.

“But it is important to resist expedient reactions that threaten the long-term stability and sustainability of retirement income provision.”

The report concludes that workers are best to seek a dual source pension from both private and public funds.

“Relying solely or largely on one source in the face of different kinds of risk is imprudent,” the report said.

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