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In particular, savings in pension funds and other pension plans have been affected by the coronavirus crisis that erupted in the spring, a recent OECD analysis shows that member contributions have fallen in many countries and have fallen. they have made various decisions to fast in retirement.
Savings for pensions and old-age pensions have been affected by a major impact due to the coronavirus: difficulties for companies, slowdown in economic activity, rising unemployment, rising debt from monetary policies and Fiscal policies have had a negative impact on public pension systems and other pension savings. pillars – writes Portfolio.hu based on the latest annual report from the Organization for Economic Cooperation and Development (OECD) examining pension systems (Pensions Outlook 2020).
According to the OECD, the value of pension savings fell significantly in the first quarter of this year, and is expected to fall by around 10% due to a deep flight in the capital market, but with the recovery at the end of September , the savings reached 50.7 trillion dollars, compared to 49 last year. , 2 trillion dollar level. The analysis concludes that in the second quarter of this year, membership fees fell in some countries compared to the same period last year. Hungary, the Czech Republic and the Netherlands were exceptions to this, presumably due to the fact that many have managed to accumulate greater savings during the coronavirus period, OECD analysts believe.
Difficulty difficulty in the back
According to the OECD, in addition to the drop in the value of pension savings in pension plans, defined benefit (DB) pension plans and annuity-based pension plans have increased their pension obligations due to falling yields and reduced employee and employer membership contributions. .
In addition, pension systems have even faced the threat of an increase in the number of cyberattacks and fraud against individuals, supervisors and pension providers.
In addition to the above, the coronavirus crisis has highlighted the solvency problems of pension plans and pension funds in several countries. Pension programs in countries that already had insufficient funds before 2020 could be a particular problem, the OECD noted.
The measures have also made the situation worse
According to Portfolio.hu, the international institute also drew attention to the fact that measures have been taken that could jeopardize future pension income: many providers have allowed their affiliates to suspend their payments or access savings earlier. According to this organization, you will fast as you approach your retirement years.
On the one hand, from the state pension system, it is positive news that job retention programs and unemployment insurance in general have reduced the impact of the fall in the labor market on pension rights, thus mitigating the impact of the current impact of the coronavirus on future pensions. On the other hand, the counterproductive effect is that accumulated debts put pressure on the system, which is already in a difficult situation due to aging societies, to finance public pensions. Third, public pensions are losing value due to the economic recession.
Does High Mortality Relieve Pressure?
In principle, high mortality can also ease the burden on the pension system, but according to the OECD, its impact is negligible and its impact on pension spending is not significant in the long term. The presumably most troubling question is not knowing what effect the coronavirus will have on the health of those who have been infected in the long term.
The OECD presents a series of proposals to overcome these difficulties. Among other things, to safeguard pension savings, states could also contribute to the maintenance of pension contributions in cases where wage type subsidies are already used to maintain jobs, and emphasize that the Early access to pension savings should only be granted as a last resort. let go.
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