GLOBAL - OECD countries have approved new guidelines that propose that pension fund managers be held legally accountable for protecting the interests of retirement plans' members and beneficiaries.
The guidelines for pension funds and insurers are aimed at strengthening investor and customer confidence in the insurance industry and protecting people’s pensions from mismanagement and fraud.
OECD countries officially endorsed the 12-point guidelines for pension fund governance, which also include specific proposals to increase accountability, integrity and experience of individuals on fund governing bodies, promoting transparency and clearer communication between fund managers and plan members, and strengthening the role of both actuaries and auditors as “whistleblowers”.
“These funds are among the largest institutional investors in many OECD countries, holding assets worth more than US$10,000bn in 2003. Yet high-profile company bankruptcies have revealed that many funds have huge deficits and the retirement benefits of their employees are at risk,” the organisation said in a statement.
OECD also called on insurers to comply with existing regulations and urges them to put in place additional internal checks and balances to improve integrity and demonstrate a commitment to better business practices.
The 12-point guidelines for insurers’ governance provide governments and the insurance industry with a roadmap and include specific proposals for the structure and responsibilities of the board, with as its primary objective the protection of shareholders and policyholders, strict internal control and reporting systems, that take into consideration insurance specificities and complexities. and the appointment of an independent, external auditor to certify an insurer’s accounts at least once a year and who has the power to alert regulators to irregularities or criminal violations. The role of the actuary is also confirmed as essential for the governance of insurers.
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