The Organisation for Economic Co-Operation and Development (OECD) has today stated that UK auto-enrolment has made ‘good progress’ but emphasised a number of key areas that would improve overall adequacy and security of DC retirement income.

In its latest report DC Design and Delivery, the OECD detailed a series of delivery features that pension policy holders and regulators must focus on to improve DC outcomes.

The OECD stated that there must be greater coherence between the accumulation and decumulation phases with a greater focus on labour, financial and demographic risks.

Furthermore, the organisation argued that ‘nudge’ techniques should be used such as automatic annual increments to push members to increase contributions.

The report also accentuated that current tax incentives favouring higher earners should be replaced with matching contributions to make sure that incentives favour lower and median earners, and default investment strategies such as life-cycle should be used to mitigate volatility and the risk of a sudden market shock.

UK minister for pensions Steve Webb stated: “We’ve made great strides with automatic-enrolment, but that’s just the start; we must ensure that people can access high-quality schemes that are affordable to employers and attractive to employees.

“Too few people have been saving into pensions and part of this is a lack of trust. We need to restore confidence. By reinvigorating workplace pensions, having new defined ambition pensions and ensuring value-for-money charges, we can get more people to put something by for their old age.”

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