The Organisation for Economic Co-operation and Development (OECD) has raised concerns over the continued gender pension gap in OECD countries, as well as the impact of rapidly ageing populations, which it warned are set to put further pressure on global pension systems. 

The OECD's 2025 Pensions at a Glance report warned that lower birth rates and longer life expectancies will continue to raise fiscal pressures on pension systems at a time of high public debt and competing spending needs.

According to the report, populations across the OECD will age rapidly over the next 25 years, as the OECD estimated that there will be 52 people aged 65+ for every 100 people aged 20-64 by 2050, up from 33 in 2025 and only 22 in 2000.

This is expected to be even worse for some, as the projected increase by 2050 is particularly strong in Korea, by almost 50 points, and in Greece, Italy, Poland, the Slovak Republic and Spain by more than 25 points. 

At the same time, the working-age population of people aged 20-64 is projected to fall by over 30 per cent over the next 40 years in Estonia, Greece, Italy, Japan, Korea, Latvia, Lithuania, Poland, the Slovak Republic and Spain.

OECD secretary general, Mathias Cormann, said: “Population ageing is a key structural challenge across OECD countries, with significant economic, fiscal and social implications.

"With the working-age population estimated to fall by 13 per cent over the next 40 years, and GDP per capita expected to drop by 14 per cent by 2060 as a result, countries will face downward pressure on their revenues while spending on ageing related expenditures is going up. 

"As we live longer, and live longer healthier, we need to work longer. Countries need to increase effective retirement ages and strengthen opportunities to work at older ages to enhance the financial sustainability of pension systems, ensure financial security in old age, and support strong economic growth.”

Such increases in retirement age are already being seen, with the normal pension age in the average OECD country rising from 64.7 and 63.9 years for men and women retiring in 2024 to 66.4 and 65.9 years, respectively, for people starting their career in 2024, based on current legislation.

Future normal retirement ages range from 62 in Colombia (for men), Luxembourg and Slovenia to 70 years or more in Denmark, Estonia, Italy, the Netherlands and Sweden.

Despite these increases, cracks in many pension systems are already beginning to show, as on average across OECD countries, full-career average-wage workers entering the labour market today will receive a net pension at 63 per cent of net wages. 

This future net replacement rate was below 40 per cent in Estonia, Ireland, Korea and Lithuania. 

Although the future net replacement rate of full-career workers at half the average wage is higher, it still falls below a full replacement level, at 76 per cent on average.

The picture is even bleaker for women, as highlighted by this year's focus on the gender pension gap in the report, which revealed that while the gender pension gap has improved slightly (declining by 5 percentage points since 2007), women still receive monthly pensions that are 23 per cent lower than men’s on average across OECD countries. 

According to the report, women receive monthly pensions that are about one‑quarter lower than men’s on average across OECD countries, ranging from less than 10 per cent lower in Czechia, Estonia, Iceland, the Slovak Republic and Slovenia to more than 35 per cent lower in Austria, Mexico, the Netherlands and the United Kingdom, and 47 per cent lower in Japan.

The OECD found that gender differences in lifetime earnings, driven by differences in employment, hours worked and hourly wages, are the main driver of the GPG, averaging at 35 per cent across OECD countries.

Given this, the OECD argued that countries will need to put in place a comprehensive strategy encompassing labour market, family and pension policies to resolve the gender pension gap. 

In particular, it said that policy priorities for countries seeking to unlock the untapped labour market potential of women and reduce gender gaps in the labour market and in pension incomes include more affordable childcare.

It also called for fewer disincentives to work in the tax and benefit system, encouraging enrolment in technical, in-demand subjects, and ensuring equality of opportunity for leadership positions. 

Protecting survivors’ standards of living following a partner’s death is also key, according to the OECD, as it pointed out that survivor pensions reduce the gender pension gap in mandatory earnings-related schemes by about one-third on average, with women accounting for 88 per cent of recipients.

Commenting in the report, OECD directorate for employment, labour and social affairs, Stefano Scarpetta, said: "Improving the situation of women in old age and ensuring that they are treated fairly has taken centre stage in pension reform debates, from France and Mexico to Germany and Japan, to name just a few countries. 

"It is in the labour markets where gender differences need to be tackled most urgently. 

"The analysis in this report shows that gender differences in employment, hours worked and hourly wages make equal contributions to gender gaps in lifetime earnings – each contribute about one-third to the total.

"And change also has to happen at home; without better sharing of unpaid work it will be difficult for women to increase their working hours."

However,  Scarpetta emphasised that "this does not mean that pension policies have no impact on gender pension gaps".

"Given that more women than men rely on basic pensions and old-age safety nets, any policy measures that support and redistribute towards low-income retirees will also have an effect on gender pension gaps," Scarpetta said.

It is only with a comprehensive strategy encompassing labour market, family and pension policies that we will be able to finally close the gender pension gap."

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