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EU-28

22 December 2017

EU: OECD publishes pension report 2017

The OECD 2017 report on pensions provides an updated overview of the state of art of pension reforms in the OECD countries. The report reveals that especially in Europe the reform has continued, although at a slower pace, with an increased statutory pension age in future and the introduction of an automatic link between pension benefits and life expectancy.

The 2017 edition of the OECD report Pensions at a Glance highlights the pension reforms undertaken by OECD countries over the last two years. Moreover, one special chapter focuses on flexible retirement options in OECD countries and discusses people’s preferences regarding flexible retirement. The report updates information on the key features of pension provisions and provides projections of retirement income for today’s workers. It offers indicators covering the design of pension systems, pension entitlements, the demographic and economic context in which pension systems operate, incomes and poverty of older people, the finances of retirement-income systems and private pensions. The executive summary resumes that, since 2015, the pace of pension reforms in OECD countries has slowed and reforms have been less widespread. However, some European countries changed retirement ages, benefits, contributions or tax incentives.

The overview of pensions reforms reveals that the Czech Republic, Finland, Greece and Poland took far-reaching measures, with some of them reversing previous reforms. Over the last two years, the statutory retirement age was changed in six countries. The statutory retirement age will increase in about half of OECD countries, with links to life expectancy in Denmark, Finland, Italy, the Netherlands, Portugal and the Slovak Republic. On average, the normal retirement age will increase by 1.5 years for men and 2.1 years for women, reaching just under 66 years around 2060. This means that, on average, the retirement period will increase relative to people’s working lives. Three countries have future retirement ages over 68 years: Denmark, Italy and the Netherlands. By contrast, the normal retirement age will remain below 65 only in France, Greece, Luxembourg, Slovenia and Turkey for full-career workers. Moreover, Poland and Switzerland will maintain a gender gap in the retirement age.

The section on flexible retirement signals that older workers with low educational attainment are much less likely to be in employment than their better-educated peers, although employment rates among these workers varies substantially across countries. In 2016, the average employment rate across OECD countries among 55-64 year-olds with low levels of education was 44%, compared with 59% and 72% among those with medium and high levels of education, respectively. Employment rates among older workers with low educational attainment were below 30% in Belgium, the Czech Republic, Poland, Luxembourg, the Slovak Republic and Slovenia. By contrast, they exceeded 60% in Iceland and Sweden. Denmark, Greece and Spain apply limits to post-retirement earnings, above which pension benefits are reduced. Danish pensioners can earn up to two-thirds of average earnings before their earnings-related benefit is reduced, and on top of this the means-tested supplement is reduced for earnings above 15% of the average wage. In Greece, the monthly pension benefit of an individual aged over the retirement age who continues to work is reduced by 60% if earnings are above the social security threshold. This section also provides an overview with main rules of pension penalties, bonuses and combining work and pensions.

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