Executive summary

The outbreak of the COVID-19 pandemic in 2020 provoked a global health crisis, soon followed by an economic and financial crisis. Retirement savings and old-age pension systems were one of the many components of our societies impacted by these events, which are unprecedented in recent history. The economic effects of the crisis have been accumulating for the past years as governments introduced successive health measures to try and curb the spread of the virus. The slowdown of economic activity across the globe resulted in soaring unemployment and falling stock prices in the first quarter of 2020 as financial markets reacted.

This publication examines the implications of COVID-19 for asset-backed pension arrangements and provides policy guidelines for confronting similar shocks in the future. It documents the initial set of policy guidelines put forward by the OECD and how policy makers tried to cushion the impact on workers, employers, retirees and pension providers. While all countries faced similar challenges, policy responses differed according to the country-specific circumstances. Nonetheless, policy makers can still learn and benefit from each other’s experiences. This publication also explores the impact of COVID-19 on mortality and on future mortality and life expectancy improvements, as well as the potential role that savings earmarked for retirement can play in supporting the economy, while ensuring that pension providers invest these savings in the best interest of members.

COVID-19 has entailed many challenges to asset-backed pension arrangements, reducing the level of assets when financial markets fell, straining the solvency of plans offering a benefit promise, reducing the ability to contribute, and inducing individuals and policy makers to prioritise short-term needs over long-term interests. It has also created general operational disruptions, leading pension providers and members to favour digital tools but exposing them further to cyber risks.

Policy makers swiftly responded to these challenges, in line with the OECD recommendations. They introduced measures that subsidise contributions to retirement savings plans, limit the materialisation of short-term investment losses, and provide leeway with respect to regulatory requirements to allow pension providers to focus on pressing issues given operational challenges.

Some of the implemented measures provided short-term relief but may have a lasting impact on the retirement income adequacy of future retirees. These measures include those allowing to defer, reduce or stop pension contributions, as well as those granting early access to retirement savings.

Early access to retirement savings should be a measure of last resort and only under specific exceptional personal circumstances of hardship. Early access should be legislated, as well as the conditions under which it could happen, to avoid legislative changes in the middle of a crisis that can have long-lasting negative impacts on retirement income adequacy.

There is a related policy issue, currently under discussion in many jurisdictions, about the need for emergency savings or rainy-day funds to face shocks. Building emergency savings is a good idea to help people face future shocks. However, the savings in those emergency accounts may need to come from new savings to avoid lower retirement savings that may affect retirement income adequacy.

COVID-19 has led to an increase in mortality rates during the last three years, 2020-22. However, whether this will translate into changes in future improvements in mortality and life expectancy is far from straightforward. Current knowledge suggests that future improvements will return to levels observed before the COVID-19 pandemic. Nevertheless, policy makers, regulators and supervisors should step up monitoring developments in mortality rates.

Pension providers can play a role to support the economy after the COVID-19 crisis. They already invest significantly in businesses through equities and corporate bonds. Given their long-term horizon, pension providers can also invest in long-term illiquid assets, such as infrastructure investments, that can finance the economic recovery.

Several obstacles may impede greater involvement by pension providers in supporting the economy, such as the lack of investment opportunities, regulatory barriers and limited investor capability to handle complex investments. Some risks also emerge, as there may be calls on pension providers to invest savings earmarked for retirement in companies or projects that may generate poor returns. Pension providers may also deviate from their strategic asset allocation to seize investment opportunities.

Safeguards and appropriate investment structures need to be in place to ensure that pension providers continue acting in the best interest of members. Strong governance and well-defined investment and risk-management strategies are necessary to prioritise the interest of members when engaging in new investment opportunities.

Policy makers can also facilitate the mobilisation of private capital to long-term investment through public-private partnerships, financial incentives, or special vehicles for alternative assets.


This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD.

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Note by the Republic of Türkiye
The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Türkiye recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Türkiye shall preserve its position concerning the “Cyprus issue”.

Note by all the European Union Member States of the OECD and the European Union
The Republic of Cyprus is recognised by all members of the United Nations with the exception of Türkiye. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.

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