OECD and TUAC agree: pension security must be central to global recovery

"It was reassuring to hear the OECD state so frankly that an effective pension system is not only socially necessary, but also one of the required responses to the economic crisis," says Larry Brown, NUPGE Secretary-Treasurer

Ottawa (15 July 2009) - Retirement security and the right to decent, adequate and predictable pensions must be placed at the heart of economic recovery plans, according to leadership representatives of trade unions from the Organization for Economic Cooperation and Development (OECD) countries.

This was the conclusion from a meeting on pensions organized by the Trade Union Advisory Committee (TUAC) to the OECD held in Paris earlier this month. National Union of Public and General Employees' (NUPGE) National Secretary-Treasurer, Larry Brown, attended the meeting representing both NUPGE and its international union the Public Services International (PSI).

OECD representatives who TUAC invited to the meeting also made it clear that the weakening of pension systems is not a sensible response to the economic crisis. OECD pointed out that cutting national pension systems during this period of economic instability would act as an economic destabilizer. This would be especially dangerous in a time when the baby boom generation is beginning to retire in large numbers. OECD officials said that the organization is concerned about the creation of widespread poverty if pension systems are not maintained.

It was obvious at the TUAC meeting that there is concern in all OECD countries about being able to preserve, protect and build viable pensions systems. The global crisis, with its resulting unemployment, precarious work and downward pressure on wages, has combined to threaten pension financing, which has brought pension sustainability to the top of the political agenda in many industrial countries and emerging economies.

The TUAC pensions experts warned OECD against simplistic approaches to reform. Rather than just focus on the cost of pensions, governments need to also focus on the clear economic and social benefits of effective pensions systems. Widespread poverty among senior citizens would be socially disastrous and would be economically crippling since the purchasing power of retirees is increasingly playing an important role in economic growth.

TUAC is of the view that the best way to ensure pension sustainability is to maintain and promote wage-based economic growth as well as a fair and adequate tax base for governments. It is also important to break with the ill-advised policies of the past: policies like debt-financed consumer spending and regressive tax regimes that have squeezed out labour incomes and government revenues, which are the main sources of pension financing.

While pension systems are country-specific, the trade union experts discussed common principles for trade union action on pension reform in the aftermath of the crisis. These include:

• robust public schemes that have universal coverage;

• an effective system of workplace pensions that are cost effective and regulated to protect workers against market and longevity risks; and

• pension governance structures that give workers the right to representation.

The TUAC representatives urged the OECD to make the provision of secured pensions a policy priority. They also welcomed the public release of revised OECD guidelines on the governance of pension funds, which among others, recommend employee representation on the board of pension funds.

Brown noted, "It was reassuring to hear the OECD state so frankly that an effective pension system is not only socially necessary, but also one of the required responses to the economic crisis.

"It’s fairly obvious that squeezing the purchasing power of a large and growing segment of the population will end up slowing down the economy even more, while subjecting Canada’s seniors to an unacceptable level of poverty," added Brown.

"This issue of pensions is a concern for unions in many countries and it is reassuring that we have made a move to more effective and coordinated international work to defend pensions more broadly." 


The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE

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