Private pension plan assets have fallen by around $5trn across the OECD over the past year.
Total pension assets across the group of developed economies have seen their value fall by 20%, and the OECD had called on governments to reform their private pension systems.
In December 2007, the OECD estimated total private pension assets amounted to $28trn, but have tumbled since the financial crisis began.
The US has seen the biggest losses, with total assets down $3.3trn, while just five countries, including the UK, account for a further £1.2trn fall in asset values.
OECD research found countries where funds have high exposure to equities have seen the biggest loss in value. Ireland saw the biggest falls with total fund assets down 30%.
The OECD expects more defined benefit schemes to close as funding shortfalls put further cash pressures on firms which are struggling with the downturn.
Policy responses have varied in different countries, with some giving schemes more time to make up a funding shortfall, while others are reviewing the design of 'autopilot' funds, where assets are automatically reallocated to low risk investment as a scheme member grows older.
The OECD has reiterated its stance on private pension funding, and suggests employing more expert advisers to pension fund boards as well as greater monitoring of the relationship between fund assets and liabilities.
Schemes like the UK's Pension Protection Fund may also come under pressure during 2009 as sponsor firms go out of business, and may need to be bailed-out by governments.
While private pension regulation has evolved, there are still some unresolved issues," says André Laboul, head of financial affairs at the OECD.
"[This includes] the appropriate design of default investment and pay-out options in defined contribution plans or the application of risk-based funding regulations to defined benefit plans. The OECD will be devoting much time in 2009 to examine these policy issues."
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]IFAonline
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