OECD presents study on pension systems.

On 27 November, the Organisation for Economic Co-operation and Development (OECD) presented its study "Pensions at a Glance". Since 2005, the OECD has compared the pension systems of its member countries every two years. The latest edition reviews the reforms of recent years and discusses recent demographic trends and projections regarding population ageing. A particular focus is placed on the gender pension gap. OECD analyses show that the gap has decreased on average across OECD countries from 28 per cent in 2007 to 23 per cent in 2024. Germany recorded the largest decline of all OECD countries, from 43 per cent to 26 per cent.

Gender-specific labour market

The authors of the study emphasise that the gender pension gap is a result of labour market disparities and must primarily be addressed there. Differences in employment, working hours and wages contribute equally to the average income gap of 35 per cent in OECD countries – which ultimately translates into lower pensions for women.

On average in the OECD, women's working lives are six years shorter than those of men. Due to the sharp increase in women's working lives, especially in the later stages of their careers, the difference in Germany has shrunk to just over four years. The gender pay gap in OECD countries averages eleven percent. At 21 per cent, Germany has one of the highest pay gaps. Employed women in Germany also work an average of 7.5 hours fewer per week than men; the OECD average is five hours. Changes in societal roles are also necessary: without a fairer distribution of unpaid work, women can hardly increase their working hours. This requires institutional measures such as expanding childcare services.

Pension policy measures

Even though the pension gap is primarily a consequence of the different employment histories of women and men, it can be significantly reduced by the design of the pension system. Measures such as higher benefits for low-income pensioners, progressive pension formulas, survivors' pensions or better consideration of entitlements from family leave can help to reduce the pension gap. In presenting the study's findings for Germany, Dina Frommert (German Federal Pension Insurance) emphasised the importance of survivors' pensions in reducing the gender-specific pension gap.

Demographic ageing

Over the next 25 years, the population will age significantly. On average, across OECD countries, the number of people aged 65 and over per 100 people of working age is expected to rise from 33 today to 52 in 2050. In 2000, the figure was still 22. Particularly strong increases are expected for South Korea (just under 50 points) and for Greece, Italy, Poland, Slovakia and Spain (each over 25 points). Germany, with an increase of 17 points, is slightly below the OECD average – similar to the rise between 2000 and today (14.5 points). As the population ages, the number of people of working age is shrinking. In Germany, it will decline by about 23 per cent over the next 40 years, compared to around 13 per cent across the OECD.

Extending working life – social investments

The retirement age across the OECD is rising from 64.7 to 66.4 years. Germany is already above this level (66.2 years) and will remain so in the future (67 years). At the same time, labour force participation declines with age: the employment rate of 55- to 64-year-olds averages 66 per cent across the OECD (75 per cent in Germany), well below that of younger age groups. Among 65- to 69-year-olds, 26 per cent work on average in the OECD, 20 percent in Germany – and around 50 per cent in countries such as New Zealand, Japan and Iceland. Presenting the study, Mark Pearson (OECD) stressed the need for more health prevention so that people can work longer. In 2023, around 60 per cent of those over 65 in the EU had at least one chronic illness; more than half felt limited in their daily lives.

Relevant topics for Europe

During the presentation of the study, Katarina Ivanković Knežević emphasised its importance for future work at EU level. Reducing the pension gap is also a key objective of the European Commission's Gender Equality Strategy and will play an important role in the follow-up report to the Pension Adequacy Report 2024. In addition, social investments in people that enable longer and more successful participation in working life remain a central issue at the EU level.