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DEFINED BENEFIT

OECD countries facing $78 trillion in pension liabilities — Citi report

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High unfunded liabilities combined with demographic changes are putting pressure on public and private pension funds globally, said a new Citigroup report.

According to the report, the total value of unfunded government pension liabilities for 20 countries that belong to the Organization for Economic Cooperation and Development is $78 trillion.

Looking at the private sector in the U.S., S&P 500 companies faced pension deficits of $403 billion at the end of 2015. In the U.K., FTSE 350 companies had estimated pension deficits of £84 billion ($119 billion).

Demographic changes such as increasing longevity and a rising ratio of retirees to active employees, are also putting pressure on people's retirement security globally, according to the report.

To address these challenges, the report recommends governments take a consistent approach in measuring pension liability and publishing their data. Other considerations include raising the retirement age, making the required pension contributions, adopting “collective defined contributions” like the Dutch pension market, and for corporations with frozen DB plans to get out of the “insurance business.”

The full report is available here.