New York-based CFA Institute has released a list of 10 principles that contribute to an ideal retirement system, which would include a pension system that requires contributions by employers, employees and the self-employed and tax incentives that motivate individuals to voluntarily save for their retirement.

The list is a part of a report entitled An ideal retirement system prepared by Mercer LLC for the CFA Institute. The 10 principles are meant to provide a foundation for dialogue and debate among the investment profession to consider and assess any needed changes in pension and retirement systems, according to the CFA Institute’s announcement.

Paul Smith, president and CEO of the institute, calls retirement an issue that is too big not to address.

“In this year’s annual CFA Institute global market sentiment survey, nearly 35% of responding members showed concern about retirement issues, such as the impact of aging populations, pension plan shortfalls and low levels of retirement savings,” he says in a statement. “Our members have spoken, we have listened, and we look forward to an industry-wide debate that brings us closer to solutions for the benefit of society.”

The report outlines the following principles:

  1. Clear objectives for the whole retirement system, including the complementary roles of each pillar of income or financial support.
  2. A minimum level of funding should be made into a pension system for all workers with contributions by employers, employees and the self-employed.
  3. Cost-effective and attractive default arrangements before and after retirement.
  4. Administration and investment costs should be disclosed with some competition present to encourage fair pricing.
  5. Flexibility as individuals’ personal and financial circumstances vary, and retirement will occur at different ages and in different ways across the population.
  6. Benefits provided during retirement should have an income focus but permit some capital payments, without adversely affecting overall adequacy.
  7. Contributions (or accrued benefits) at the required minimum level must have immediate vesting. These benefits should be accessible only under certain conditions, such as retirement, death, or permanent disability.
  8. Taxation support from the government in an equitable and sustainable way, providing incentives for voluntary savings and compensating individuals for the lack of access to their pension savings.
  9. The governance of pension plans should be independent from the government and any employer control.
  10. Appropriate regulation, including prudential regulation of pension plans and some protection for pension scheme members.