Pensions, a mirage for young generations: who starts working now at age 71

Young Italians now entering the job market will retire at age 71. The news that outlines a long horizon before receiving an OECD income is given in the annual pension report. «Italy is one of nine OECD countries that links the legal retirement age to life expectancy. In a contributory system, such a link is not necessary to improve pension finances, but is intended to prevent people retiring too early with too low pensions and to promote later-life employment and therefore potential output. For those currently entering the labor market, the normal retirement age would be 70 years in the Netherlands and Sweden, 71 years in Estonia and Italy and up to 74 years in Denmark, based on established links with life expectancy.” .

Out of work later, but with subsidies still capable of allowing those who leave their jobs to live decently, recalls the Paris economists’ organization. “In the presence of high inflation, frequent indexation of pensions is necessary to support the purchasing power of retirees. Consistent application of indexation rules is essential to strengthen confidence in pensions,” says the OECD. Protecting pensioners against high inflation, however, the body recognizes – “has proven to be expensive. It may be right, in exceptional times, for high-income pensioners to share some of the burden with the working-age population in terms of reduced benefit adjustments.”

More than half of OECD countries “fully protect retirees from inflationary trends over time. These countries index pensions to prices or prices and the share of real wage growth, if positive.” However, criticism is emerging about pension advances linked to hard work. «In cases of dangerous and costly work, permanent withdrawal from the labor market, sometimes at a very early age, is an inefficient solution».

Source: IL Tempo