GLOBAL - The Organisation for Economic Cooperation and Development (OECD) has warned governments should not to try and deal with short-term challenges in economic conditions by postponing pension reforms as the longer-term impact could be more damaging further down the road.

Authors of a biennial report published today, entitled Pensions At A Glance 2009, said a review of OECD countries and their retirement regimes noted planned pension reforms in some countries have either stalled or been postponed, while other nations, such as the Slovak Republic, have attempted to undo earlier reforms - a move which the OECD fears could happen elsewhere should finance ministries feel too much pressure.

The 280-page report warned "the financial and economic crisis means that governments' attention is focused, more than ever, on the short term" and said the concern is, based on the actions of countries such as Italy - which has now postponed planned reforms to the retirement age and benefits paid - that "governments may be tempted by short-term expediency to backtrack on earlier reforms by…relaxing rules for early retirement as labour-market conditions worsen".

At the same time, authors warned long-term, strategic planning, which is vital to retirement income policy, is being "set aside".

"The short-term political pressures on governments to respond are huge. But it is important to resist expedient reactions that threaten the long-term stability and sustainability of retirement income provision."

It continued: "The crisis may lead to further changes that are not consistent with the long-term strategy needed for a sustainable pension policy."

The OECD also argued that governments should consider a diversified approach to delivering pensions benefits overall, as it believes this would better protect people.

"The best approach to pension provision is to use a mixture of sources of retirement income, including both public and private, as well as the two main forms of financing (pay-as-you-go and funded pensions). Relying solely or largely on one source in the face of different kinds of risk is imprudent," suggested the report.

The document provides a complete review of OECD countries' pension regimes, the reforms and updates on poverty levels among pensioners, the likely impact poverty and earning brackets have on retirement benefits as well as comments about the potential costs to government coffers.

It noted, for example, that Germany's pension system has been less affected by the recent crisis so far than many other OECD countries, though the replacement rate of pensions income to earnings is also one of the lowest at 43% - the average net income of people aged over 65 within OECD countries being 82% by the mid-2000s.

Interestingly, however, the OECD noted the speed of pension reform slowed considerably between 2004 and 2008, compared with earlier years - in only five countries there was little or no change - and the process was described as being "one of evolution rather revolution".

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