Major industrialised countries need a radical rethink of everything from pension funds to road signs to help their rapidly ageing populations, the Organisation for Economic Co-operation and Development said yesterday.
With the first of the baby boomer generation already heading into early retirement, time was running out to prepare the world for its growing army of pensioners, the OECD warned.
"The main demographic changes start to come about in 10 to 15 years' time. This gives our societies a limited window of opportunity in which to introduce reforms in areas such as pensions . . . financial markets, health and long-term care," it said in a lengthy report.
One of the first steps was to reverse the current trend of offering early retirement. "There is no economic or biological basis for retirement when people are in their 50s or 60s, yet the length of leisure in retirement is increasing rapidly." The OECD said men nowadays in the 29-nation OECD had an average life expectancy of 76 years, with just 38 of those years spent in employment. By contrast, in 1960, life expectancy was 68, with men working an average 50 years.
It also noted that the number of people aged 65 or over would rise by 70 million over the next 25 years while the working-age population would rise by five million. In the past 25 years, the number of people of pensionable age rose by 45 million but the number of workers rose by 120 million.
The OECD said many of its members had already started to reform their state pension systems to prepare for the future flood of retirees.
But it said more needed to be done, adding that private pension funds should be encouraged.
Once the waves of post-second World War babies start retiring in force, there could be a downward pressure on global markets as funds become net sellers of assets. "There is a possibility that the retired baby boom generation will find that retirement income from pension funds is lower than would be expected based on the extrapolation of current trends," the document said.
The OECD predicted that health care costs may rise by between 10 and 20 per cent in the next 15 to 20 years to cope with the growing number of elderly people.
