As pension systems are under increasing pressure due to population ageing, reforms are needed to ensure both pension adequacy and the financial sustainability of pension systems. How this can be achieved differs by country and depends on both the design of the pension system and investment decisions of pension funds and individuals.
Ageing
Increasing life expectancy and declining fertility rates have resulted in rapid population ageing across many OECD countries. This trend is expected to intensify over the coming decades, with major consequences nationally and globally. Policy action is needed now to ensure that people can comfortably enjoy their later years without inequalities becoming wider both within and across generations.
Key messages
In many countries people are living longer and healthier lives than ever before. While this is good news for individuals, it poses a challenge for societies to provide for rising numbers of retirees, with the larger financial burden falling on younger generations. Giving people better choices and incentives to continue working at an older age is crucial for responding to the challenges of rapid population ageing.
As people get older, it becomes more likely that they will need help with day-to-day activities like cooking, cleaning, getting dressed and self-care. This type of support is known as long-term care (LTC). With rapid population ageing, countries need to rethink how systems can promote healthier ageing, improve the quality of care and find new ways to care for people at the end of their lives, while balancing the social adequacy of systems with financial sustainability.
Context
Population ageing
Populations have been ageing faster in recent years based on the old-age to working-age ratio. Over the last 30 years, the number of people older than 65 years old per 100 people of working age (20 to 64 years) increased from 21 in 1994 to 33 in 2024 on average across OECD countries. Over the next 30 years, it is expected to reach 55 per 100 people of working age. Although ageing trends are largely common across countries, one striking feature is the growing difference in projected ageing among OECD countries during the first half of the 21st century. The average pace of ageing is projected to be fast until about 2060, from when it is set to slow down substantially, but there is considerable uncertainty when projecting so far in the future.
Retirement ages
Longer lives mean people will also have to work longer to get their pension when compared to workers retiring today. The normal retirement age (the age at which individuals become eligible to receive full retirement income without penalty) is going to increase in at least 20 of the 38 OECD countries. A man starting a full career from age 22 today will be able to retire at age 66.3 years (around 2066) compared to 64.4 years for those retiring now.
If all legislation is applied, the retirement age for both men and women will increase from 67 to 74 years-old in Denmark, and from 64.3 to 71 years-old in Estonia, the highest levels in the OECD. The lowest future retirement age for men is set to be 62 years-old in Colombia, Luxembourg and Slovenia, with Colombia having the lowest age for women at 57 years-old.
