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).

State pension age in OECD countries

Country	Male	Female	Change planned?	Notes
Australia	65	63	Yes	Women's pension age will gradually rise to 65 by 2014 and both will increase to 67 in stages between 2017 and 2023.
Austria	65	60	No
Belgium	65	65	No
Canada	65	65	No	The normal pension eligibility is age 65 but an early pension can be claimed from age 60.
Chile	65	60	No
Czech Republic	62	61	Yes	Retirement age will be increased for men to 63 years from 2016 and for women without children from 2019 and to age 59 to 62 for women with children (depending on number of children they have raised).
Denmark	65	65	Yes	Government propose to raise the age to 67 over an eight year period starting in 2017.
Finland	63	63	No	Under the Employees' Pension Act (TYEL) the retirement age is 63 to 68 years.
France	60	60	Yes	Will be raised to 62 over the next eight years.
Germany	65	65	Yes	This will increase to age 67 between 2012 and 2029. It is possible in some circumstances to retire at 63 years.
Greece	65	60	Yes	There are plans to increase women's age to 65 years.
Hungary	62	62	Yes	Retirement age will increase to age 65 for men from 2018 and for women from 2020.
Iceland	65	65	No	This is for the public sector. The legal retirement age for private sector employees is 67.
Ireland	65	65	No	There is no fixed retirement age for employees. There is a statutory retirement age of generally 65 for some public servants.
Italy	65	60	No
Japan	60	60	Yes	The pension age is gradually being increased to 65, between 2001 and 2013 for men and between 2006 and 2018 for women.
Korea (Republic of)	60	60	Yes	The pension age is being increased gradually and will reach age 65 by 2033.
Luxembourg	65	65	No	Normal retirement age is 65 but early retirement at 57 is possible.
Mexico	65	65	No	Normal retirement age is 65 years but early retirement is available from age 60.
Netherlands	65	65	Yes	There are plans to increase the retirement age to 67.
New Zealand	65	65	No
Norway	67	67	No	60% of employees are entitled to early retirement from the age of 62 years under the early retirement plan.
Poland	65	60	No	There are some professions that are entitled to earlier retirement such as teachers and armed forces.
Portugal	65	65	No	Early retirement is possible in some circumstances from the age of 55 years.
Slovakia	62	57	Yes	The retirement age for women is currently increasing to 62 years by 2014 so that both sexes will be equalised
Spain	65	65	No
Sweden	61	61	No	The retirement age is flexible, state pensions can be claimed from age of 61 years.
Switzerland	65	64	No
Turkey	60	58	Yes	There are plans to increase the retirement age in stages from 2035 to age 65 for both men and women.
United Kingdom	65	60	Yes	The retirement age for women is being increased between 2010 – 2020 to 65 years. State pension will rise to age 66 in 2024, age 67 in 2034 and age 68 in 2044.
United States	66	66	Yes	Increasing to age 67 in stages.