OECD: retirement age “may have to increase” to balance the books

Retirement age may need to rise by TWO YEARS to balance the books after Covid stokes debt mountain, says leading think tank

  • OECD says retirement age is set to increase by two-thirds of life expectancy gains
  • This means that if life expectancy increases by three years, the retirement age will increase by two
  • Think tank said government budgets would be strained without action on retirement
  • OECD warned utilities would crunch and debt would rise to costly levels










The UK’s retirement age will need to rise significantly in the coming years if the country is to avoid a debt crisis and massive pressure on public services, a leading think tank has suggested.

The Organization for Economic Co-operation and Development has warned that the retirement age “should not follow expected gains in life expectancy across the OECD”.

The think tank argued in a new report that developed countries will need to take action to keep more of the population working longer.

He suggested that the retirement age should increase by two-thirds of the future increase in life expectancy.

This would mean a two-year increase in the UK’s statutory retirement age for every three years added to life expectancy.

The UK’s retirement age will need to rise significantly in the coming years if the country is to avoid a debt crisis and massive pressure on public services, a leading think tank has suggested.

The Organization for Economic Co-operation and Development has warned that the retirement age

The Organization for Economic Co-operation and Development has warned that the retirement age “should not follow expected gains in life expectancy across the OECD”

The OECD, which covers 38 countries around the world, said raising the retirement age would improve living standards while reducing debt pressure.

The legal retirement age in the UK was 65 for both men and women in 2018, but is expected to gradually increase in the years to come and now depends on when someone is born.

The National Statistics Office predicted in December 2019 that in 25 years, life expectancy at birth for boys would increase from 2.8 years to 90.4 years and from 2.4 to 92.6 years for girls. .

The OECD has said the aging population will add significant pressure to government budgets in the years to come.

He warned: “Without policy changes, maintaining current public service standards and benefits while keeping public debt ratios stable at current levels would increase fiscal pressure in the median OECD country by nearly eight percentage points. percentage of GDP between 2021 and 2060, and much more in some of the countries. ‘

The warning comes in the wake of the coronavirus crisis which has seen UK government borrowing hit record highs and national debt surpassing £ 2 trillion.

The OECD said that “labor market and pension policy reforms could help improve living standards and ease future tax pressures.”

Life expectancy in the UK is expected to increase dramatically over the next four decades, according to forecasts released by the Office for National Statistics

Life expectancy in the UK is expected to increase dramatically over the next four decades, according to forecasts released by the Office for National Statistics

UK national debt soared to levels last seen in the early 1960s following the coronavirus crisis

UK national debt soared to levels last seen in the early 1960s following the coronavirus crisis

He said: “An ambitious reform agenda combining labor market reforms to increase employment rates with reforms to eliminate early retirement pathways and keep the effective retirement age rising by two-thirds of earnings. future life expectancies could halve the expected increase in tax burden in the median country. , even after factoring in future spending pressures related to aging. ‘

The OECD said many countries would be able to borrow more money to pay for some of the expected increases in public spending in the decades to come.

But he warned: “This strategy could delay, but not avoid, the need for fiscal consolidation if public debt ratios are to be prevented from rising to levels that could hamper the ability of governments to stabilize governments. economic fluctuations and to make the necessary public investments. “

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