People in OECD countries will have to save more for their retirement as a result of the major pensions reforms carried out in recent years, according to a new OECD report. The average pension promise in 16 OECD countries studied was cut by 22%. For women, the reduction was 25%.
Pensions at a Glance 2007 notes that in only two countries, Hungary and the United Kingdom, did pension promises increase on average. In France, Germany, Italy, Japan and Sweden, future benefits will be cut by between 15 and 25% and in Mexico and Portugal by over 30% from what people would have been entitled to before the reforms.
The impact on workers varies widely across the OECD. Several countries moved towards greater targeting of benefits on poorer pensioners, notably Mexico, Portugal and the United Kingdom. Austria, France, Germany and Sweden also protected low earners.
Reforms have worked in the opposite direction in other countries. Poland and the Slovak Republic, for example, have tightened the link between pension entitlements and earnings when working, without putting in place any new social safety nets for low earners. This may increase the poverty risk for retirees who have not been covered by the system over their full career, the report finds.
See full Press Release.
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