ASIA-PACIFIC - The pension systems in many Asian countries need swift reforms to be viable in the future, a report by the Organization for Economic Co-operation and Development (OECD) says.
It said, while systems vary from country to country, the current systems were unlikely to provide security to retirees since early withdrawals are common and coverage of formal pensions systems is relatively low.
And it found that pension savings are also usually taken in a lump sum, as opposed to in the form of an annuity, and pensions in payment are not adjusted for changes in cost of living.
The report's author, Edward Whitehouse, said: "These systems are unlikely to be sustainable as populations age and retirement-income provisions mature."
Many Asian countries will experience in one generation the demographic changes that took over a century in North American and European countries.
The report warned: "There is now a narrow window for many Asian countries to avoid future pension problems and repeating many of the mistakes made in Europe and North America."
To improve the systems, Whitehouse suggests making pensions payments using lifetime average earning to make them "financially sustainable and fairer," eliminating the lump-sum payment option and taking making cost of living adjustments to pension payments.
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