Pension Systems in Crisis: OECD Report Reveals Challenges and Opportunities for Reform
The OECD’s Pension at a Glance 2025 looks at reforming pensions in OECD Countries over the period between 2023 – 2025 and provides new indicators of pension systems and projections of pensions for retirees. It reports on rapid population ageing, where the ratio of people aged over 65 to people aged 15 to 64 is expected to rise sharply from 2023 to 2050 due to declining birth rates and increasing life expectancy, now means there is a significant challenge to the sustainability of pension systems.
There are a number of important changes to policy that countries are implementing in response to demographic shifts, including increasing retirement ages in the Czech Republic and Slovenia, as well as reforms in both Chile and Mexico aimed at achieving better pension adequacy for women. Many countries are reviewing contributions and calculating pensions so that they can ensure that the short- and long-term financial stability of their pension system will be maintained.
Pension payments offered to future workers are estimated to be about 63% of net wage earnings on average across the world, but there are significant variations between different countries. Women continue to receive monthly pension payments that are roughly 25% lower than the amounts received by men. Imbalances in employment availability for jobs, hours worked per week, or base salary are major contributors to the lifecycle earnings differentials that create the overall pension gap. Such disparities tend to compound over time and result in lower overall pension benefits received at retirement (especially applicable to women). The report includes various policy measures to address these differences through increased participation in the workforce (labour market) and to improve equity in terms of salary. Closing these gaps will help create a more equitable pension system while ensuring the financial viability of the pension system for many years into the future.
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