17/03/2011
By Matt Ritchie
The Organisation for Economic Cooperation and Development says recent increases to retirement ages in half of OECD countries are a step in the right direction, but will still not be enough to tackle future increased pension costs.
In its Pensions at a Glance 2011 report released today, the organisation says the size of the working age population in the OECD will peak in 2015, before declining by more than 10% in 2050.
While the average retirement age in the OECD will have lifted to 65 by 2050 at current rates, rising life expectancy is forecast to outstrip the increased pensionable age by 1.5 years for men and 2.5 years for women by then.
Although further reforms are required, OECD Secretary-General Angel Gurría said it is important to ensure they 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."
The OECD says that lifting pension ages is only part of the answer, with measures aimed at helping employers deal with a "greying" workforce also required.
Encouraging people to invest more in private pensions is also key, the organisation says, as countries such as Germany and New Zealand have successfully broadened coverage of private retirement provision while Ireland and the United Kingdom are taking “innovative steps” in this direction.
Commenting on the report, chief executive of the UK's National Association of Pension Funds Joanne Segars said that increases in longevity mean it is "inevitable" that people will find themselves working longer.
However, the Association is concerned that the UK government's plans to raise the state pension age in the country to 66 will move too quickly to give many women in their late 50s the chance to adapt.
"Unless people want to rely on one of the worst state pensions in Europe, they are going to have to save more if they want to enjoy a comfortable older age.
"The trade-off for working longer must be a better state pension. It needs to become more generous and a lot simpler. The Government must prioritise its reform," Segars said.
For the report, and national highlights, click here
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