Pension funds suffered a blow in the financial crisis. So did public confidence. How can pensions be made more secure?

The credit crunch could usher in a new paradigm of stewardship for pension fund trustees and the dawn of a more accountable capitalism.

With ageing and pressure on public finances, monitoring the pensions market has become an important task for policymakers. The market is vast: in 2006 the total OECD funded pensions market was valued at some $24.6 trillion, with a ratio of OECD pension fund assets to OECD GDP of nearly 73% in 2006, and above 100% in a few countries.

Making pension systems financially sustainable in the face of population ageing has obliged governments to carry out reforms. This has meant finding savings, but also lower retirement incomes. According to the latest edition of Pensions at a Glance, most of the OECD countries surveyed saw a decline in benefits as a result of pension reforms, affecting retirement incomes of average earners, but also the poorest pensioners (see graph).

The OECD has only been around for half a century, but is nevertheless an ageing club. Just before it was set up in 1960, only one in twelve people was aged 65 and over on average in OECD countries.

Are older workers denied choice about when and how they retire? Certainly, the average number of years that workers across the OECD can expect to spend in retirement has risen sharply, from less than 11 years in 1970 to just under 18 years in 2004 for men, and from less than 14 years to just under 23 years for women.

Just 53% of over-50s in France are in employment. This is a low rate compared with other OECD countries whose average is 59%. The gap is particularly wide among less-skilled workers: in 2002, only 51% of unskilled men aged 50 to 64 in France had jobs, compared with 88% in Iceland, 80% in Switzerland and 78% in Japan.

Can governments afford the pensions promised to future retirees? After all, higher life expectancy means pensions have to be paid for a longer time. The OECD’s new comprehensive “pension wealth indicator” works out the lump-sum equivalent of all the pension income a worker can expect to receive, taking into account pension level, retirement age and life expectancy in the respective country.

One of the most striking paradoxes of today’s OECD societies is that, although people live longer and healthier, they also tend to retire earlier and younger. The trend in the US is not as marked as in some countries, but it is there nonetheless. By 2030, almost a fifth of the American population is projected to be aged 65 and over, compared with around an eighth only five years ago.

Does privatisation work for some of the world’s poorest countries? Privatisation in Sub-Saharan Africa: Where Do We Stand? looks at the last decade of privatisation in Africa and discusses its successes and failures in terms of public finance, economic efficiency, pricing and local markets.

One in seven people of working age in OECD countries claims to have a long-term health problem which limits their activities of daily living. This is a resource OECD countries can ill afford to see go to waste given population ageing and potential labour shortages in the future, a new report says.

Population ageing is set to affect all OECD countries over coming decades. Demographic projections are uncertain, but on middle-of-the-road assumptions, the ratio of people over 65 to those between 20 and 64 could double between now and the middle of the century. And in some countries, such as Japan, Italy and Spain, this ageing will be much stronger.

France’s economy has been doing relatively well, but it could do a lot better if it made fuller use of young and old in the workforce. The challenge is, how?

Resistance to pension reform marked the French political scene in May and June of this year, as public sector unions demonstrated against proposed legislation. We asked Martine Durand from the OECD Employment, Labour and Social Affairs Directorate to explain the basic reasons for the reforms and the protests.

Ageing poses a serious challenge to OECD countries, in particular, how to pay for future public pension liabilities. And early retirement places an unsustainable burden on pension financing. There is no easy solution, but delaying retirement could help.

Ageing is one of the top challenges our economies face. As the OECD’s baby-boom generation reaches retirement there will be fewer workers for each pensioner and so, a greater strain on funding. The Dutch example is enlightening. It is one of the OECD’s more stable economies and, for many, a model of sound policymaking. Yet even to the Dutch, the ageing question has proven a hard nut to crack.

Will you still need me, will you still feed me, when I'm 64 ; are the words of a pop song by The Beatles from the 1960s, an era when retirement was just around the corner at that age for most people. Written today and the song may have been different, as retirement ages vary so much.

In 1930 – a period of numerous technical innovations – John Maynard Keynes wrote a thoughtful essay imagining the economy 100 years hence. He predicted substantial improvements in living standards stemming from capital accumulation and technical change. And he even concluded that mankind’s adjustment to productivity increases will ultimately imply a need to work only a 15-hour week in order to meet economic needs!