CEPR issued a new report which calls for a European pension regulator among a host of recommendations for the global pensions industry. The study’s authors also warned about the dangers of Liability-Driven Investing and called for less reliance on pension advisors.
The authors favour automatic adjustments in PAYG pensions, such as indexing pension benefits and the retirement age to the evolution of longevity. They also call for a mandatory participation in collective pension plans offering a limited number of default choices.
The Report argues among orhers for limited freedom of choice for individual participants, but substantial competition for various asset management and other services that pension funds can contract out, taking advantage of an integrated market for financial services. Competition would therefore occur at the wholesale rather than the retail level.
The Report also argues in favour of hybrid pension systems in which participants transform their risky, defined-contribution type, claims into guaranteed defined-benefit type claims as they grow older.
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