Brussels, 28/07/2004 (Agence Europe) - The member countries of the Organisation for Economic Co-operation and Development (OECD) have agreed on six fundamental principles for the regulation of pension funds. The agreement, which was made public on Thursday 22 July, enters an international context which has been shaken, in recent years, by many scandals linked to the management of pension funds. In the form of a recommendation to the thirty members of the OECD, it aims to protect employees which belong to this kind of pension scheme, who often come off badly.
Based on the work of the International Network of Pension Regulators and Supervisors, the six fundamental principles decided upon go from such general themes as "conditions for effective regulation and supervision" to much more specific recommendations. "The aim is not to be counter-productive, as we are in favour of pension funds", explained André Laboul, of the OECD's financial division. To his great surprise, nonetheless, certain recommendations have had the assent of all member countries. The principle 2.3, for instance, requires the legal separation of the assets of the pension plan and the assets of the company. Principle 4.4, which takes as its backdrop the scandal of the American company Enron, affirms that "self-investment by people responsible for managing pension funds should be banned, or limited to 5%".
In another register, fundamental principle 5 looks at the rights of members and beneficiaries. It defends the right of employees changing company to transfer their pension fund to their new employer, their own pension plan or one set up for them by a previous employer. "In many cases, many individuals lose their profits", André Laboul points out. Lastly, principle number 6, recommends an effective control of pension funds. Principles 6.10 and 6.20 provide for governments concerned to be allowed to submit the members of a pension fund governance body to a "fit and proper" test.