The Organization for Economic Co-operation and Development says that governments, and the financial industry, have to do more to ensure financial literacy.

Many people have a poor understanding of the financial issues that affect their lives, according to OECD analysis. It reports that surveys conducted in OECD countries and some non-member economies show that people often overestimate their understanding of risks and are typically not saving enough to secure an adequate retirement income.

“With the growing shift to defined-contribution pension schemes in OECD countries, which transfer longevity and investment risks to households, better financial education and awareness is essential to assure an adequate level of retirement income for millions of individuals,” it says.

The group reports that OECD countries have agreed on new good practices on financial education relating to private pensions and insurance that call on governments and business to work together to improve financial literacy in order to give people the tools they need to secure their future. The practices say that governments have a responsibility to educate and promote a “culture” of financial responsibility among their citizens and, in particular, young people.

The pensions and insurance industry should make financial education central to its governance responsibilities to customers and investors, it also says. Steps they should take range from using simple, jargon-free language to providing unbiased information and advice that are clearly distinguished from marketing, promotion and advertising, the group adds. Media campaigns to raise awareness of pensions and insurance issues and risks should be run, notably targeting vulnerable people such as immigrants or those with few savings, it suggests.

“We need to find a better balance between the increasing complexity of financial products and services and people’s capability to understand them,” said André Laboul, head of OECD’s Financial Affairs division. “Every cent or penny invested by governments and business in raising awareness and education today will make a huge difference in years to come.”

The good practices, related to private pensions and insurance, will be presented at an international conference organized by the OECD and the U.S. Treasury, in Washington D.C, from May 7 to 8.

To promote enhanced visibility and co-operation on financial education , the OECD has also launched a new website, the OECD International Gateway for Financial Education, www.financial-education.org, designed to act as a central international source of information on the issue. The OECD has also set up an international network of public experts on financial education, which will meet for the first time in Washington D.C. on May 6, in advance of the conference.