Extending working lives and promoting private pensions are essential in making pension systems sustainable and adequate according to the OECD.
Speaking at the launch of the inaugural Pensions Outlook 2012 report, OECD pensions expert Ed Whitehouse pointed to a clear trend towards increasing retirement ages across OECD countries.
While countries such as the UK have already moved towards a retirement age of 68 it is closely followed by US, Spain and Norway who have implemented an age of 67.
Only three countries (France, Slovak Republic and Slovenia) now have pension ages of less than 65.
The report highlighted key recommendations to strengthen pension provision.
These recommendations include:
• The need for long term political commitment to build sustainable defined contribution systems. The report has urged governments to steer clear of short termist policies such as reductions in contributions and instead focus on long term improvements.
• Auto-enrolment as a second best option with full compulsion potentially being the most logical solution.
• Financial incentives should be developed so they also benefit low income workers. Head of private pensions unit Juan Yermo pointed to New Zealand where the government contributes a lump sum for all pension savers.
• Ensuring better investment and longevity risk protection. Yermo said the make up of default funds needed to be looked at as a "matter of real urgency after a decade of low returns."
Yermo also said annuitisation needed to be encouraged across OECD countries as a means of heading against increasing life expectancy.
• Keeping fees and charges low
• Ensure effective communication and facilitate choice. Yermo said: "We have relied too much on inertia, There is the need for either a platform or clearing house to be put in place to help members make clear comparisons between the different products on offer."
According to Yermo the development of these recommendations will do much to "strengthen the safety net against old age poverty" which could increase as countries look to scale back state pension provision.
Caring for children and elderly relatives
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Square Mile’s series of informal interviews
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