Promoting the employment and employability of older workers will be key to ensuring the sustainability of pension systems, according to the OECD.

Its Pensions at a Glance 2023 report, said this was because the share of the population aged 65 and over in the OECD is projected to reach 27 per cent by 2050; as well as ensuring pension sustainability, old-age employment would also address labour market shortages.

Pensions at a Glance 2023 shows that OECD countries have combined action to increase statutory retirement ages, curb early retirement, offer incentives to work longer and upgrade skills to foster employability, job mobility and labour supply of older workers.

Normal retirement ages are set to increase in 23 out of 38 OECD countries, reaching an average of 66.3 years for men and 65.8 years for women starting their careers today. In Denmark, Estonia, Italy, the Netherlands and Sweden, the normal retirement age will rise to 70 years or more if life-expectancy gains materialise as projected and legislated links with life expectancy are applied.

The labour force participation of older workers has increased sharply across the OECD, with the employment rate of 55-to-64-year-olds in the OECD reaching a record 64 per cent in the second quarter of 2023, almost 8 percentage points higher than a decade ago. However, many older workers still struggle to keep their skills up to date, have limited access to good-quality jobs, and risk having an inadequate pension in old age because of short and unstable working careers.

“Pensions at a Glance provides comparative data and analysis on pension systems and reforms across the OECD to help countries ensure our pension systems remain a secure, sustainable, effective and fair source of retirement income. Pension reform alone cannot fully address the impact of population ageing and longer life expectancies on pension system sustainability,” OECD Secretary-General Mathias Cormann said.

“By providing targeted support for training and ensuring healthy working conditions, countries can improve the employment prospects of older workers. This will help ensure that pension systems remain financially sustainable while delivering decent incomes in retirement.”

The report also assesses the impact of special pension policies in OECD countries for workers in hazardous and arduous jobs, including those granting access to early retirement through occupation-specific schemes or special rules within a general pension scheme.

“Prevention of health problems and reskilling to move workers out of arduous work before health deteriorates significantly is key. Support for people with work-related health problems should be provided primarily through work injury, sickness and disability insurance rather than special old-age pension schemes for hazardous or arduous work. Improving the regulation of work-time and workplace safety and a strengthened role for labour inspection bodies and occupational health services would also help,” the report noted.

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