The OECD says investment risk in private pensions is a “major concern” after UK funds suffered negative returns between 2001 and 2010.
The think-tank’s latest report, titled ‘OECD Pensions Outlook 2012’, warns poor investment performance risks undermining peoples attempts to accumulate sufficient private pension savings to fund their retirement.
The OECD says: “A major concern in private pensions is investment risk. The financial and economic crisis has exerted major stress on private pension arrangements.
“Most countries’ pension funds are still in the red in terms of cumulative investment performance over the period 2007-11.
“Even when measured over the period 2001-10, the pension funds’ real rate of return in the 21 OECD countries that report such data average a paltry 0.1 per cent. Such disappointing performance puts at risk the ability of private pension arrangements to deliver adequate pensions.
“The UK follows the general trend, with average real investment returns of pension funds of -1.1 per cent over the period 2007-10 and -0.1 per cent over the period 2001-10.”
The OECD says policymakers should focus on improving the design of defined-contribution investment strategies so investment risk is reduced as workers approach retirement.