The OECD has just published the report, “Pensions at a Glance 2013.” According to the study, recent reforms of pension systems have helped to contain the rise in future cost resulting from ageing populations and increasing life expectancy.
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.
The report says that most OECD countries will have a retirement age for both men and women of at least 67 years by 2050. Recent reforms will mean that most workers entering the labor market today will get lower pensions than previous generations and will need to save more for their retirement.
Low earners have been largely protected from cuts in most countries and will receive in retirement around 70% of their earnings for a full career. But middle earners will receive on average only around 54% of their earnings upon retirement, facing the risk of a large drop in their living standards. High earners will receive only 48% 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.
The whole report is available for the IESE Community here.