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FIAP Declaration: Efforts aimed at improving the pensions of members of the social security systems

7 July, 2016

The improvement of the pensions of members of the pension systems requires the timely adoption of a series of measures for improving social security systems, including those necessary for addressing the negative impacts of external factors on the benefits such systems can provide, the most meaningful of which are: (i) The increase in life expectancy at retirement; (ii) The global drop in interest rates; and (iii) High rates of informality in the labor market.

Faced with these challenges, the International Federation of Pension Fund Administrators (FIAP) is implementing an action plan that includes activities and proposals that contribute to improving the pensions granted by the social security systems in general, and by the individually funded systems in particular, counteracting the negative effects of the factors mentioned above. With this in mind, FIAP wishes to state its standpoint regarding the following topics:

1. It is essential to review and periodically update the key parameters of the pension systems and the individually funded programs (mainly the retirement age and the contribution rate), depending on the evolution of the variables that are most relevant to the financing of pensions.

2. Pensions must be financed through different contributory and noncontributory programs, with clearly defined objectives. FIAP adheres to well-designed, integrated and complementary multipillar pension systems.

3. In order to achieve adequate pensions in these systems, the development of individual and collective Voluntary Pension Savings acquires special relevance as a mechanism for complementing the pensions financed with mandatory pension savings.

4. In order to improve the long-term returns on investments, and therefore, final pensions, the investment opportunities of the pension funds must be extended, with the assurance that they can be appropriately diversified.

5. Efforts made for improving pensions will be insufficient if we do not achieve more active participation of our members in the construction of their pensions. Hence, FIAP will seek the mechanisms for encouraging the improvement of communications, and the pension education of members of the system and the public at large. It is imperative to inform active workers (future pensioners) of their future pension estimates, so they can make informed savings decisions.

Fiap Newsletter N° 20

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