International guidelines for pension fund licensing and governance issued by the Organisation for Economic Co-operation and Development (OECD) and the International Organisation of Pension Supervisors (IORPS) have been welcomed, even though the effects of these reforms will not be felt instantly.
The guidelines cover the minimum requirements pension funds and trustees need to comply with in order to be granted a licence to operate, including funding policy and risk management, and lay out conditions under which licenses may be revoked.
Reay said: "Outside of the US and EU, things are a little less formal among the other members of the OECD - many don't have such stringent requirements in place in terms of pension industry governance.
"For the first time, countries which legislate on pension fund governance in the future will have a model of best practice to follow, but it won't change things overnight."
The OECD claimed the guidelines would allow the industry to move to closer to standards consistent with those of other regulated financial institutions, such as banks and insurance companies.
The OECD has 30 member nations, with over a million pension funds as part of this. Together, the funds have assets in excess of US$16trn.
Ambrogio Rinaldi, chairman of the OECD Working Party on Private Pensions, which drafted the guidelines, said: "While they are respectful of differences in national approaches to pension fund regulation, they reflect recognition of the need to ensure common, basic standards among pension entities wishing to enter the industry."
He added: "The guidelines essentially extend good governance requirements that already exist across the European Union and the US."
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