Recent reforms will be inadequate to cover higher pension costs in the future, despite increases in retirement ages in half of Organisation for Economic Co-operation and Development OECD countries, says the OECD report Pensions at Glance 2011.
The organization that works for the improvement of the economic and social well-being of people around the world warns that by 2050 the average pensionable age in OECD countries will have reached 65 for both sexes, up by 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 two years for men and 1.5 years for women., increasing the time spent in retirement in all but five OECD countries.
Recent reforms are a step in the right direction to rein in public pension spending rising as a result of population ageing. However, OECD Secretary General Angel Gurría stressed “further reforms are needed that are both fiscally and socially responsible. 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.”
On average, public pensions make up about 60% of retirement incomes, the remaining 40% is made up almost equally of income from work and from private pensions and other savings. Gaps created by reduction in public benefits through reforms will need to be filled.
“Higher pension ages are only part of the answer,” said Gurría. “Countries need to do more to fight discrimination, to provide training opportunities for older workers and to improve their working conditions. This would help employers adapt to a greyer workforce.”