The OECD Pensions Outlook 2020 says that population ageing, low growth, low returns and low interest rates were already weighing heavily on funded and pay-as-you-go pension plans, defined benefit and defined contribution schemes, as well as private and public retirement provisions before the outbreak of the pandemic, writes the OECD.
The shocks from the global health and economic crisis will likely keep economic growth, interest rates and returns low long into the future, putting many people at risk of not being able to save enough for retirement.“Countries need to strike a balance between the short-term income support provided by measures like granting people access to their retirement savings before they reach retirement age, and the potential negative effect of such measures on future retirement incomes,” said OECD Secretary-General Angel Gurría. “Allowing access to retirement savings should be a measure of last resort, and based on hardship circumstances rather than being granted widely and unconditionally.”“The COVID-19 crisis has also underlined the importance of having long-term savings for emergencies,” he added.
“Introducing long-term savings arrangements that combine a savings account earmarked for retirement and a savings account for emergencies could make retirement savings more resilient.”.
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