OECD highlights pensions at four European states
EUROPE – The Organisation for Economic Cooperation and Development has highlighted four of its member countries - Norway, Italy, Belgium and Finland – where pension reform and population ageing are most pressing.
For Norway, pensions are key to fiscal sustainability, the body said. “Long-run fiscal sustainability is conditional on pension reform, as future pension expenditure growth is projected to be extremely rapid in Norway compared to other countries.”
For Italy, the impact was on the country’s debt situation. “A significant decline in the high debt ratio will require additional structural measures, notably a faster implementation of the recent pension proposals.”
Referring to Belgium, the OECD said: “The government should continue to take the steps necessary to ensure that the budget remains balanced. This is important to maintain confidence in its debt-reduction strategy, a central element in preparing for population ageing.”
“This should be supported by further reductions in the tax burden on low-income earners and in incentives for early retirement.”
The OECD also warned Finland about the impact of fiscal policy on ageing. “Cuts in labour taxes are welcome if accompanied by spending restraint, but further fiscal stimulus would risk being pro-cyclical, and make it more difficult to cope with the future fiscal implications of ageing.”
But the organisation sounded an optimistic note about the world economy. “After a drawn out period of fits and starts, a palpable recovery has finally taken hold across the OECD,” the Paris-based body said in its twice-yearly economic outlook.
“The strong momentum already achieved in Asia, North America and the United Kingdom provides ample evidence of the renewed strength of the world economy,” it added. “Despite lingering domestic weaknesses, continental Europe is also on its way to join the recovery.”