Retirement funds worldwide returned $1.5 trillion on investments in the first half of this year after losing $5.4 trillion in all of 2008, according to the OECD. Estimated average returns of 3.5% in the six months ended June 30 followed an average nominal loss in 2008 of 21.4%, according to a report by the Organization for Economic Cooperation and Development.
Despite the good news, retirement systems have not addressed some structural challenges, Andre Laboul, head of the financial affairs division, wrote in a preface to the report. “In particular, the ongoing shift towards defined contribution arrangements calls for an overhaul of regulatory approaches, with default investment options that deliver risk mitigation as members approach retirement,” he wrote. “There is also a need to strengthen disclosure requirements and to implement effective financial education programs.” — Drew Carter