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From a government perspective, flexible retirement could increase people’s wellbeing and may entice some people to work longer, in turn helping to increase workers’ future pensions and boost economic growth and tax revenues.
It could also bring risks, however, such as individuals underestimating their financial needs in retirement and finding themselves at risk of old age poverty.
Reporting on its latest ‘Pensions at a Glance’ analysis, the think tank for developed country governments said its findings indicated that, in many OECD countries, flexible retirement is possible and not discouraged.
However, despite stated interest in more flexible forms of retirement, individual take-up has been low, it noted.
According to the OECD, in Europe about 10% of individuals aged 60-64 or 65-69 combined work with drawing pensions, representing about one in five and one in eight pensioners, in the respective age groups. The average share of workers older than 65 working part-time in OECD countries had been stable at 50% over the past 15 years, it added.
Low adoption of flexible retirement was due to barriers outside the pension system, such as age discrimination by employers and limits to people’s autonomy in deciding when to retire, the OECD said.
To resolve this, governments must complement pension policy measures with wider labour market policies to make flexible retirement work, it said.