Retirement age across the world - ILC Report

Retirement age across the world - ILC Report
Policy Reforms in Ageing Health and Innovation in OECD Countries
NON-HEALTH RELATED
Pension Reform
One very common policy response to increased longevity is pension reform to ensure the future sustainability of pension systems while ensuring that older people receive adequate retirement income (OECD, 2009). The most common measures taken are raising the state pension age, scrapping or limiting the possibility of early retirement and encouraging personal (individual/employer) pension provision (OECD, 2009; OECD, 2006).
Almost all OECD countries have made changes to state pension age; those with a state pension age below 65 are in the process of raising it such as Japan, Korea and the Czech Republic, whereas countries such as the UK, Germany, Denmark and the Netherlands that already have a state pension age of 65 are increasing it (OECD, 2009; Guardian, 2010). However, it is important to note that most while the state pension age guides retirement, many people retire before reaching it, while others choose to continue working (Berry, 2010). Many countries including Portugal, Turkey, France, Germany, Italy, Japan and Sweden have cut future benefits, although many have targeted cuts so that poorer people are not adversely affected (OECD, 2007). A number of OECD countries, such as France, Hungary, Poland, Portugal and Germany have made personal pension provision more attractive through favourable tax treatment, while other countries such as New Zealand and the UK have introduced or are introducing opt-out personal pension schemes for people without access to employer based schemes (OECD, 2009).
When it comes to incentivising early or later retirement, there are differences (OECD, 2009). Countries can however take different options; for example Germany retains state funded early retirement which acts as an incentive, whereas the UK abolished it a long time ago and incentivises people to retire later by improving pension entitlements for those who defer their state pension (Muller-Camen et al, 2011).
While some OECD countries such as the USA do not have a default retirement age, many do. Until recently, the UK had a default retirement age of 65, which meant that an employee could be forced to retire at 65 even if they did not want to (BIS, 2011) The scrapping of the default retirement age was warmly welcomed by older people’s organisations and trade unions and cautiously welcomed by employers; retirement will now become the subject of negotiation between employee and employer (BBC News, 2010a).