Pension reform not enough on its own – OECD
GLOBAL – The Organisation for Economic Cooperation and Development says pension reform by itself is not enough to deal with the problems of ageing populations – behaviour and attitudes must change as well.
“Nearly all OECD countries face the need to reform their pensions system,” it says. “Some have already taken steps, while others are getting ready to. Reforms are necessary to ensure the sustainability of pay-as-you-go schemes.”
“But this is only one part of the equation,” the body continues. “Pension reform needs to go hand in hand with changes in the behaviour and attitudes of all actors involved to promote a longer working life.”
The OECD says there working lives must be extended to help ease the problems of demographic ageing. “If nothing is done quickly to extend working lives, living standards will fall in the course of the coming decades.” It sees the old-age dependency ratio rising to 46% in 2050 from the current 22%.
“In these circumstances, it is essential to have as many people working as possible - young people, women and especially older workers.”
It adds that most countries “have considerable manoeuvring room” to increase the employment rate of persons between age 55 and 64.
It says that the average rate in the OECD is currently 48% -- varying from 25% or less in France and Belgium, to 70% in Switzerland. “The first step governments can take is to eliminate provisions that subsidise early withdrawal from active life - first and foremost, early retirement schemes.”
But older workers need to have real employment prospects, it adds. “Their jobs must be of sufficient quality to encourage them to stay on for an extended period. This requires a veritable change in attitude on the part of all the actors concerned.”
It says demographics are “a matter of social equity, not only between workers and pensioners, but also between generations”.
“Without reform, and without a change in attitude, it will be our children and grandchildren who will pay the price.”