Countries Should Strengthen Pension Systems to Adapt to Changing World of Work
With the world and its technology developing at such a fast pace , the whole way of life is changing. Certain human jobs are being replaced by machines and people are forced to find new and creative ways to make money.We cannot expect that things are always going to remain the same when the world is rapidly developing. We, as a people, and the governments, need to be open-minded to change in order to be able to adjust to the new circumstances sufficiently and quickly.
People are looking into ways to make money without actually having a career or an ‘8am -5pm’ job. It has become quite popular for older workers to develop non-standard employment- self-employment, temporary or part time work. Unfortunately pension plans and policies have not yet been updated with the newly created self employment and people are struggling. Pensions at a Glance 2019 says that non-standard employment now accounts for more than one-third of employment across OECD countries. OECD stands for the Organisation for Economic Co-operation and Development. It is an intergovernmental economic organisation with 36 member countries, founded in 1961 to stimulate economic progress and world trade.
OECD Secretary-General Angel Gurría said that “Reforming pension policies in OECD countries to reduce gaps between standard and non-standard workers in terms of coverage, contributions and entitlements is essential.” Workers shouldn’t be penalized for the type of work they choose to do. As long as they are helping the world grow and giving back, the world should be making sure they are supported and giving them access to personal pension plans for life. It should be easy to transfer pension rights and assets when changing jobs, no matter what kind of job a person chooses to go into.
According to the article, on average in the OECD, people over-65 receive 87% of the income of the total population. In other countries the percentage varies from 70% - 100%. Unfortunately not giving access to pension plans and making them easier to transfer from job to job is resulting in a higher percentage of poverty in people older than 65. “The relative poverty rate for those older than 65 is slightly higher than for the population as a whole (13.5% versus 11.8%) for the OECD on average. The old-age poverty rate is below 4% in Denmark, France, Iceland and the Netherlands, while it is above 20% in Australia, Estonia, Korea, Latvia, Lithuania, Mexico and the United States.”
The normal retirement age for 2018 has varied from 51-67 in different countries of the OECD but given the current legislation, the future normal retirement age is expected to range from 62-71. People will need to work longer in order to achieve the happy, peaceful and comfortable retirement life. Expected for the future 33.6 % of adult life will be spent in retirement compared to 32.0% retiring on average today.
Pension reforms have been focusing on different issues in the past two years, such as loosening age requirements, increasing pension benefits or expanding pension coverage. Change happens, but not as fast as you would want it to, especially when it has to do with the money available to spend on public needs and covering pension plans. Thinking long term seems to be causing pressure on the financial sustainability of many pension systems. The article discusses the long term effect this might cause. It may leave the pension systems “ less resilient to economic shocks in the future” and causing them to be “unprepared to face population ageing”. Countries should strengthen pension systems to adapt to changing world of work because it will only make people happier and in the long run affect the world positively.
News Room. (28 Nov 2019). Countries Should Strengthen Pension Systems to Adapt to Changing World of Work. Retrieved November 29, 2019 from