OECD and World Bank calls for pension modernisation

A joint OECD/World Bank report calls for urgent reform of Asia's retirement income systems, which it says are not prepared for the rapid population ageing forecast over the next two decades.

The Pensions at a Glance: Asia/Pacific report analysed the retirement income systems of 18 Asian countries.

In OECD countries, an average of 70 per cent of the working-age population is eligible for a pension. However, in South Asia just 7.5 per cent of the working-age population is eligible and in East Asia only 18 per cent, the report said.

The report recommended that Asian countries with defined-benefit schemes should shift to calculating pension entitlements using lifetime average earnings and employees should be allowed to take out their savings only on retirement via regular payments (annuities). Countries should also link pension payments to reflect changes in the cost of living - currently only observed in China and the Philippines.