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Pensions at a Glance 2013 says that most OECD countries will have a retirement age for both men and women of at least 67 years by 2050. This represents an increase from current levels of about 3.5 years on average for men and 4.5 years for women. Recent reforms will mean that most workers entering the labour market today will get lower pensions than previous generations and will need to save more for their retirement. Working longer may compensate for some of these reductions but overall each year of contribution will pay out less than today. Governments now need to do more to encourage people to work longer and save more for their retirement to ensure that benefits are adequate enough to maintain standards of living into old-age. Policy action is also needed to avoid rises in inequality among retirees and pensioner poverty.
“Raising retirement ages and promoting private pensions are all steps in the right direction but alone they are insufficient", said OECD Secretary-General Angel Gurría. “Governments need to consider the long-term impact on social cohesion, inequality and poverty. Ensuring everyone has a decent standard of living after a life of work should be at the heart of policies.”
Low earners have been largely protected from cuts in most countries and will receive in retirement around 70 per cent of their earnings for a full career. But middle earners will receive on average only around 54 per cent of their earnings upon retirement, facing the risk of a large drop in their living standards. High earners will receive only 48 per cent of their earnings, but they are less vulnerable due to higher personal savings and investments.
Keeping down the costs of running personal and occupational pension schemes is critical. Governments need to urgently address this as part of their efforts to promote private pension systems, says the OECD.
Commission welcomes OECD report on value of recent reforms to face future challenges
Recent reforms of pension systems have helped to contain the rise in future cost resulting from ageing populations and increasing life expectancy. These are the findings of the new OECD report Pensions at a Glance 2013. The study presented today in Brussels confirms the European Commission's recommendations set out in the February 2012 White Paper on adequate, safe and sustainable pensions (see IP/12/140 and MEMO/12/108).
"The OECD observations confirm our analysis", said European Commissioner for Employment, Social Affairs and Inclusion, László Andor. "The recent reforms aimed at strengthening the sustainability of pension systems needs to be accompanied by changes in work places and labour markets that enable women and men to work longer. Moreover, as the pensionable age and contribution years for a full pension go up, countries must pay careful attention to those who, because of arduous work, care duties or exposure to unemployment and sickness, are unable to meet the new requirements."
Governments now need to do more to encourage people to work longer and save more for their retirement, to ensure that benefits are adequate enough to prevent poverty and maintain living standards in old age. Policy action is also needed to limit rises in inequality among retirees and to avoid pensioner poverty.
Commissioner Andor's full speech - "Confronting the key challenges of a rapidly changing pension landscape in the EU"
Information on white paper on pensions