GLOBAL - The OECD has said that companies should create separate legal entities for their pension funds to ensure that if a company goes bankrupt, retirement income of its employees remains safe.
Unveiling unveiled new guidelines, agreed to by its member countries, the organisation said that these were aimed at more efficient regulation and management of company pension schemes.
“More efficient regulation and management of company pension schemes are needed if today’s employees are to enjoy adequate retirement pensions tomorrow,” the organisation said in a press statement.
The organisation recommended that companies should aim to ensure that the assets of their pension funds fully cover potential liabilities. Any information about pension funding should be included in their financial reporting so that investors are made aware of any shortfalls.
The investment of a company pension fund’s portfolio in the shares of that company or its parent company should be prohibited or strictly limited.
Employees moving from one company to another should be able to transfer to their new employer’s company pension fund the pension contributions made by themselves or their previous employer on their behalf, the OECD said.
The Principles of Occupational Pension Regulation cover areas such as conditions for effective regulation and supervision, establishment of pension plans, pension funds, and pension fund managing companies, pension plan liabilities, funding rules, winding up and insurance.
The rules also encompass issues such as asset management, rights of members and beneficiaries and adequacy of benefits and supervision.
The organisation said that retroactive reduction of the value of benefits previously accrued should be prevented and employees should also be given a wide choice in terms of the type of portfolio that they want their pension fund contributions to be invested in when those employees are responsible for their own investments.
The Department for Work and Pensions (DWP) will develop and test new ways to include 4.8 million self-employed workers in pension savings.
Opt-out rates at the end of June 2018 "remained consistent" with levels before the April contribution rate increase, according the Department for Work and Pensions (DWP).
The Pensions Regulator (TPR) has appointed Charles Counsell as its new chief executive, who will take over from Lesley Titcomb next year.
The Financial Reporting Council (FRC) should be abolished and audit and advisory businesses should be split into separate entities to improve the sector for both savers and investors, two reports published today say.