OECD presents study on pension systems.

In the 2023 edition of Pensions at a glance presented on 13 December, the OECD compares the pension systems of its member countries every two years. The current edition focuses on strengthening the sustainability of pension systems and reducing the shortage of skilled labour by improving employment opportunities and working conditions for older workers. In this context, measures of the OECD countries for a longer working phase are presented and discussed. In addition, the long-term adequacy of the pension systems is analysed.

Demographic change has several facets. According to the United Nations population projections used in the study, the proportion of the population aged 65 and over in the OECD region will rise to 27 per cent by 2050. This is due to the retirement of the baby boomers, a low birth rate and increasing life expectancy. In order to ensure the sustainability of pension systems and eliminate labour market bottlenecks, the authors therefore argue it is crucial to promote the employment and employability of older workers.

Labour force participation of older employees

The study shows that many OECD countries have put together packages of measures to raise the statutory retirement age, reduce early retirement and incentivise people to stay in work longer and gain further qualifications. The study shows that the labour market participation of older people has increased in many countries in recent years. The employment rate of 55 to 64-year-olds in the OECD reached a record high of 64 per cent in the second quarter of 2023, almost 8 percentage points higher than ten years ago.

Increase in the standard retirement age – increase in inequality?

The OECD also emphasises that the standard retirement age is being raised in 23 of the 38 OECD countries. The increase is a sensitive issue. Not all employees can work until the standard retirement age. Life expectancy varies greatly according to socio-cultural characteristics, and this inequality in life expectancy has increased in many countries in recent years. An increase in the standard retirement age therefore penalises people with a low life expectancy.

Further training, occupational health and safety, rehabilitation measures and prevention

In this context, the OECD is discussing the functioning of special early retirement schemes for people in occupations that are particularly hazardous or arduous. However, particularly stressful activities are only one reason for the existing inequality in life expectancy.

The authors argue in favour of more prevention in the workplace combined with retraining measures for employees. The aim is to get employees out of arduous tasks before their health deteriorates significantly. Support for people with work-related health problems should be provided as early as possible, and not via special old-age pension schemes for hazardous or arduous work.

Education and further training as well as health protection in the workplace are also crucial in order to meet the changing challenges of working life, thus being able to participate longer in working life.

Social investment

The OECD study shows that the demographic challenges facing pension systems are manageable. However, there is no all-in-one solution for all problems. This applies in particular to the increase in the standard retirement age which is highly controversial in the public debate.

In contrast, a bundle of measures is required. In particular, by investing in people's professional and health-related skills. The current OECD study underpins the "Future of Social Protection and the Welfare State in the EU” discussion initiated by the High Level Expert Group on social investment over the course of a lifetime. A discussion that the outgoing Spanish and incoming Belgian Council Presidencies have taken up in a joint Initiative on Social Investment.