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G-10 chiefs call for consistent pension funding

GLOBAL – Top finance officials of the Group of Ten leading industrial nations have called for more consistency in pension funding requirements.

The call came amid a greater focus on pensions and ageing generally at the meeting of G10 finance ministers and central bank governors in Washington at the weekend.

“It was felt that consistency between funding requirements and accounting standards should be pursued, as well as between some pension fund and insurance company regulations,” the official communiqué stated.

The statement also said that some delegates felt that retirement savings “may increasingly influence financial market behaviour”. This makes it important that regulation and supervision support the trend towards “more rigorous risk management, adequate plan funding, greater transparency and better governance”.

“Some ministers and governors saw scope for growth of some markets and financial instruments useful for retirement savings, with a potential supportive role for governments, and some considered that the shift of investment risks onto individuals meant that protection of pension beneficiaries needed to be weighed carefully,” the officials said.

They also recognized that changes in the age structure of populations would “tend to have a bearing on the conduct of monetary policy over time” – though this would not require specific policy interventions or changes in the monetary policy framework.

There were tradeoffs in policy terms, such as between free choice of investments and effective prudential control or between maximising returns and ensuring secure retirement incomes.

“Striking the right balance between such competing objectives is largely a matter of social preference, and it is not to be expected that all countries will make the same choices.

“However, some ministers and governors felt that financial education and the provision of information about savings instruments may need strengthening.”

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