OECD – a comprehensive view regarding pension system

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The latest study conducted by OECD, Pensions at a Glance 2015, reveals that recent reforms have made pension systems more financially sustainable. In addition, pensioners have higher living standards. Indeed, efforts have been made in half of the OECD countries so that the pension systems allow pensioners to a living well. Those reforms revealed to be successful, nevertheless efforts continue to be mandatory, as the risk of pensioner poverty remains rather serious.

OECD logoFinding new reforms against pensioner’s poverty risk

The OECD report provides comparative indicators regarding the national pension systems of the 34 OECD countries, but also for Argentina, Brazil, China, India, Indonesia, Russian Federation, Saudi Arabia and South Africa.

Most governments have made important efforts to bring public pension systems on a sustainable path; while these are steps in the right direction, there is now a growing risk in some countries that future pensions will not be sufficient,” said OECD Secretary-General Angel Gurría. “The long-term challenge is to design policies today that are flexible enough to adapt to the uncertainties of tomorrow’s world of work, while ensuring adequate living standards for retirees.” (Source : www.oecd.org)

According to the main findings, retirement age has considerately changed in most countries, passing from 67 to 65, or passing to 69 or 70 years old in the case of Czech Republic, Denmark, Ireland, Italy or the United Kingdom.

Even though people stop working before reaching the pension age in several countries, employment rates of people aged between 55 and 64 years old have increased sharply in many countries, passing from 42 to 66% in Germany, for example, from 31 to 46% in Italy and from 52 to 57% on average across the OECD.

France has the lowest elderly poverty rates in the OECD, especially due to the minimum pension scheme and non-contributory benefits. On the other hand, in Japan, the poverty rate among the elderly declined from 22% in the mid-2000s to 19% in 2011, but it is still above the OECD average.

The study also outlines the fact that in the future many people will receive lower pensions when they retire. Today, society must face two main challenges: the high unemployment rate among younger and the fast ageing process. Those two data combined will put governments into the impossibility to insure adequate pensions for the next generations of retirees.

As a consequence, some countries must reassure and reimagine new methods in order to insure the safety for pensioners. One of the solution could be the working longer.

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