Recent reforms will still be insufficient to cover increased pension costs in the future, despite increases in retirement ages in half of OECD countries, according to a new OECD report.
Pensions at a Glance 2011 says that by 2050 the average pensionable age in OECD countries will reach 65 for both sexes. This represents an increase of about 1.5 years for men and 2.5 years for women. But life expectancy is rising even faster, outstripping the increase in pension ages by about 2 years for men and 1.5 years for women.
This means that in all but five OECD countries the time spent in retirement will continue to grow. Recent reforms are a step in the right direction to rein in public pension spending rising as a result of population ageing. The size of the working-age population in the OECD will peak around 2015 and decline by over 10% in 2050. But governments should consider the impact of benefit cuts on the most vulnerable. Pension reforms in OECD countries since the early 1990s have reduced future benefits on average by 20 per cent.
In Germany, Japan, the United Kingdom and the United States, for example, workers on low wages only get pensions worth around half of their previous earnings. “Further reforms are needed that are both fiscally and socially responsible,” said OECD Secretary-General Angel Gurría. “We cannot risk a resurgence of old-age poverty in the future. This risk is heightened by growing earnings inequality in many countries, which will feed through into greater inequality in retirement.”