OECD on auto-enrolment, fund choices etc

Just a couple of snippets I picked up from this story on IPE. This OECD paper sets out some principles about financial education and pensions, most notably suggesting that people ought to be auto-enrolled into a scheme if they aren't offered a pension:

In the absence of other pension schemes and adequate levels of financial education and without limiting the freedom to contract, automatic enrolment in voluntary pension plans with appropriate default mechanisms and transparent opt-out procedures for contributions rates and for investment allocation should be considered.

Which is of course the Personal Accounts model. Obviously what the UK is up to on pension reform is being watched closely by other countries.

And here's what the OECD says about fund choices:

Where employees or members are offered a range of investment options, plan sponsors should consider limiting, in a well-structured fashion, the number of investment choices available (or provide a 'two tier' choice between a basic system and a system offering more sophisticated investment choices) and should provide a suitably structured default option in order to help employees or members make optimal pension investment decisions.

This is obviously informed by the widely observered trend that the more choices you offer in pension funds the less people are likely to make a choice. The OECD has actually produced some interesting stuff on this which I've blogged about previously here.

Funnily enough though I've just read a bit in the Robert Shiller book (still only about 2/3rds of the way through!) where he is quite critical of the idea of individual accounts(though this is in the broadfer context of social security reform). I'll try and post a chunk of this up later.