The Organisation for Economic Co-operation and Development said about half of the states surveyed had taken measures in the past two years to make their systems more affordable in the long term. About a third had moved efforts to strengthen safety nets and help some vulnerable groups of pensioners.
“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 OECD report, called Pensions at a Glance 2015, provides comparative indicators on the national pension systems of the 34 OECD countries, as well as for Argentina, Brazil, China, India, Indonesia, Russian Federation, Saudi Arabia and South Africa.
In its 10th anniversary edition of the report, the OECD also noted that retirement ages have risen substantially, with retirement at 67 becoming the new 65 in many countries. Several countries are planning to move towards 70, including the Czech Republic, Denmark, Ireland, Italy and the United Kingdom.
Since the early 2000s, effective retirement ages have continued to increase steadily, especially for women. Employment rates of people aged 55 to 64 years have increased sharply in many countries: from 45 to 66% in Germany, for example, from 31 to 46% in Italy and from 52 to 57% on average across the OECD.
The report shows that across the OECD there has been a shift in wealth from the young to the old.
Unemployment rates, especially among younger people, remain very high in many countries, as do long-term unemployment rates among older workers. A decline in jobs with open-ended contracts and the parallel rise in temporary and often precarious jobs are also reducing the continuity of contributions to pensions that workers can claim in retirement.
UK pension
As well it found that that the UK has one of the lowest average ‘replacement rate’ retirement incomes in the developed world, ahead of only Mexico and Chile.
The ‘replacement rate’ represents the drop in income which people experience as they move from work into retirement.
Tom McPhail, head of retirement policy at Hargreaves Lansdown said: “This analysis makes embarrassing reading for the politicians who have been responsible for the UK’s pensions over the past 25 years.
“The state pension was in steady decline for years and even now, is improving for lower earners but average payouts will not be rising. It is in the private sector though where the real damage has been done; the collapse in final salary pensions has not yet been replaced with well-funded alternatives,” he said.
The OECD also highlighted the challenge of the current low-growth, low-interest rate environment for savers and financial service providers offering life insurance and annuities.
In addition, the mortality tables used by insurers in many countries do not take fully into account projected improvements in life expectancy. This, the OECD said, could lead to pension funds and life insurers seeking higher yields and pursuing riskier investment strategies that could ultimately undermine their solvency.
This would in turn jeopardise both current and future retirement income security for many people, it said.
