GLOBAL - The Organisation for Economic Cooperation and Development has launched a financial education initiative which, among other things, suggests individuals with no access to pension schemes should be auto-enrolled into voluntary pension plans.
The intergovernmental body has presented "good practices" to tackle the level of financial literacy and pensions take-up across the globe, which it believes member countries should adopt.
The OECD is hosting a conference in Washington next week to further explain their thinking.
But within proposals for what it hopes will lead to "enhanced visibility and cooperation on financial education", the OECD presents specific measures outlining how to keep pension scheme members informed of any pension arrangements they have, as well as calls for financial education on pensions to be introduced "potentially as part of school curricula…in order to encourage individuals to start savings from as young an age as possible".
The recommendations are only guidelines and are not enforceable on governments, but the proposals could be interpreted as an attempt to align international pensions education policy, particularly in relation to defined contribution regimes, as the nine-page report of recommendation from the OECD's financial affairs division contains several recommendations already established in well-managed pensions systems.
Among the recommendations is the suggestion employers or plan sponsors should "consider limiting, in a well-structured fashion, the number of investment choices available…and should provide a suitably structured default option in order to help employees or members make optimal pension investment decisions".
At the same time, it also suggests employers should consider alerting member of pension plans to pensions shortfall risks "where they are aware that employees' or members' contributions to their defined contribution pension plans are insufficient to ensure an adequate retirement income".
André Laboul, head of OECD' financial affairs division, said the initiative is designed to call on governments and business to work together to improve financial literacy and in particular target "vulnerable people" such as immigrants or those with few savings.
"We need to find a better balance between the increasing complexity of financial products and services and people's capability to understand them," said Laboul.
"Every cent or penny invested by governments and business in raising awareness and education today will make a huge difference in years to come."
The OECD will bring together a network of public experts on financial education on May 6, ahead of its conference on May 7, to help facilitate the growth of the initative, which includes a new website described as the OECD International Gateway for Financial Education.
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