GLOBAL - A lack of innovation in design and unnecessarily restrictive regulations could be hampering pension funds, according to OECD deputy secretary general, Aart Jan de Geus.
Speaking at the European Pensions Conference in Frankfurt, de Geus said following the continuing trend from defined benefit (DB) to defined contribution (DC) schemes, some regulation no longer applied.
De Geus said: “After our research into the sector, the OECD would recommend reconsidering pension fund regulation, as imposing DB rules on DC can cancel out the flexibility of these schemes.”
Solutions in the form of hybrid schemes had not been given full enough examination by pension fund trustees, according to the deputy secretary.
He added that a lack of expertise on some pension fund boards, particularly smaller scale outfits had lead to the OECD campaigning for reforms to governance regimes.
De Geus cited Australia where the licensing of pension fund trustees had led to more streamlined boards with better knowledge and expertise.
He added how smaller scale funds should consider consolidation to take advantage of economies of scale in terms of administrative costs and wider investment opportunities.
Undertaking reforms while still expecting the fund to perform was the biggest challenge faced by pension fund trustees, concluded de Geus.
The OECD compiles data from around the world, monitors trends, analyses and forecasts economic developments. It researches social changes or evolving patterns in sectors including trade, environment, agriculture, technology and taxation.
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