Maintaining prosperity in an ageing society

Within the next decade, the number of retired people in OECD countries will start to expand much faster than the number of working-age people. This demographic change could threaten these societies' prosperty. Without major changes in public pension systems and the way people allocate time between education, work, and leisure, it is likely that fiscal and social strains will emerge. Some people, particularly the young, may be unfairly burdened by high taxation. Others, mostly the old, would face an unexpected deterioration in their living standards. How should pension, health care, and long-term care systems meet the challenge?Governments' appropriate response will have to be multifaceted reform of fiscal, social, labor market, financial market, health care, and education policies. An important part of the strategy for maintaining prosperity will require encouraging people to work longer by making it financially attractive to do so. This will entail reforming traditional public pension and medical care systems, as well as developing private alternatives to public programs that would give individuals more flexibility in deciding when to retire. Consequently, financial market infrastructures will need to be strengthened to cope with large increases in private pension fund assets. Through this multidisciplinary study, the OECD points to the need to take action now by initiating a comprehensive and consistent set of policies.