The OECD unveiled proposals on Thursday for the management of private pension schemes aimed at ensuring that employees in its 30 member states enjoy adequate retirement benefits.
The recommendations outlined by the Paris-based Organisation for Economic Co-operation and Development are not binding but are intended as a basis for member states to work on.
The OECD said it had agreed six core principles to help ensure pension obligations are met in a world where people are living longer.
"More efficient regulation and management of company pension schemes are needed if today's employees are to enjoy adequate retirement pensions tomorrow," the OECD said in a statement.
"At present many company funds are at risk from volatile stock markets. Sharp drops in equity prices can cause huge shortfalls between the current value of pension fund assets and their likely future liabilities."
It said companies should aim to ensure that the assets of their pension funds fully cover potential liabilities and that pension funds be established as separate legal entities, helping ensure that funds are safe if a company goes bankrupt.
The investment of a company pension fund in the shares of its sponsoring company should be prohibited or strictly limited.
Also, employees moving to a new company should be able to transfer their pension contributions to the new company's pension fund.
Investments should be diversified and limits lifted on the ability of pension funds to invest abroad, it added.
The OECD called for more transparency and tighter pension fund regulation to deal with company bankruptcies where little or nothing is left in pension funds.
It also said pension providers should not be allowed to retroactively reduce benefits previously accrued.
"An adequate regulatory framework for private pensions should be enforced in a comprehensive, dynamic and flexible way," it said.
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