DC and Longer Working Lives Are the Future
12 June 2012 (PLANSPONSOREurope.com) - The citizens of Europe are facing a future of working longer and increased defined contribution provision, Edward Whitehouse of the OECD’s Social Policy division, has told PLANSPONSOR Europe.
An OECD report released this week has called on governments to raise retirement ages gradually to address increasing life expectancy in order to ensure that their national pension systems are both affordable and adequate.
The OECD’s Principal Administrator, Directorate for Employment, Labour and Social Affairs, told PLANSPONSOR Europe that the major impact that the fiscal crisis has had in the eurozone is that many countries are embarking on consolidation and austerity measures.
“Pensions because they are such a large slice of government expenditure in many European countries cannot be ring-fenced from the consolidation effort. Compared with cutting benefits or increasing tax giving contributions working longer seems to be the least painful way of adjusting to the fiscal impact of the crisis but also to the longer term costs of an ageing population.
“Because public pensions in the future are going to be lower than for people retiring today in most European countries with reforms that have already been put in place if people are going to enjoy as comfortable a retirement as they do now then people will have to save more for retirement.
“It is not that we are advocating defined contribution pensions as a wonderful thing it is just that they are an inevitable consequence of an ageing population and governments don’t have the money to pay the same pension for many, many more people.”