07 June 2007

OECD report: Pensions at a Glance

The OCD released its latest pension report “Pensions at a Glance” stating that people in OECD countries will have to save more for their retirement as a result of the major pensions reforms carried out in recent years.

The report presents a consistent framework for comparing public-pension policies across OECD countries. 'Although pensions reforms in the OECD as a whole were substantial and necessary to ensure the financial sustainability of pensions systems for current and future retirees, more remains to be done,' the OECD notes. “Some countries”, the report says, “are phasing in pension reforms too slowly”.

Austria, Italy, Mexico and Turkey were singled out as worst offenders when it comes to slow implementation of the reform.

Nearly all the 30 OECD countries have made at least some changes to their pension systems since 1990. As a result, the average pension promise in the 16 countries, whose reforms are studied in this report, was cut by 22%. For women, the reduction was 25%. Only in Hungary and the United Kingdom were there increased pension promises on average.

The intense reform activity in OECD countries means that today’s workers will have to do more on their own to prepare for tomorrow’s retirement. In some countries, the savings effort necessary to reach the OECD average replacement rate is substantial, even if workers save throughout their entire career.

If young workers miss out on the first 10 or 15 years of their career because of other demands on their budget, reaching a sufficient pension level will become even more difficult. This report illustrates how important it is that workers start saving early and contribute regularly.

'Between 1999 and 2004, for example, the average retirement age for men was below 60 in eight OECD countries, including Belgium, France, Hungary and Italy,' said the OECD report.

On the whole, most OECD members have now raised their respective statutory retirement ages, the standard being 65 years. Denmark, Germany, Iceland, Norway, the UK and the US have opted to raise it to 67. Only France, Hungary and the Czech and Slovak Republic still plan to have statutory pension ages below 65.

Press release
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