Financial Market Trends

OECD’s twice-yearly journal providing timely analyses and statistics on financial matters of topical interest and longer-term developments in specific financial sectors. Each issue provides a brief update of trends and prospects in the international and major domestic financial markets along with articles covering such topics as structural and regulatory developments in OECD financial systems, trends in foreign direct investment, trends in privatization, and financial sector statistics covering areas such as bank profitability, insurance, and institutional investors.

Periodically, a small number of articles within one field of financial sector developments – constituting the so-called special focus for the particular issue – may be included.


Corporate Pension Fund Liabilities and Funding Gaps

The fixed nature of pension benefits under corporate defined benefit (DB) pension plans imply that plan sponsors face financial and potentially biometric risks. A large number of OECD countries have such DB pension schemes, whereby employees receive a specific payment upon retirement and for which sponsoring employers are responsible to some extent for meeting any shortfall in pension funding relative to liabilities, although, across countries, these schemes vary in importance. Recent financial market developments, including in particular the post-2000 equity market correction and declining interest rates have illustrated the vulnerability of DB plan sponsor companies to financial risks. While it is difficult to form a judgement about the exact magnitude of the funding gaps that have arisen, estimates of such gaps were considered to be of sufficiently large scale to raise concern amongst policymakers. Policy responses run the gamut from relief measures intended to lessen temporarily the financial pressures on sponsoring...


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