The current protests in France over President Emmanuel Macron's plans to raise the retirement age have caused many policymakers elsewhere to shine a light on their own pension systems.
France is not alone in this — almost all countries in the Organisation for Economic Co-operation and Development have plans to gradually increase the age at which workers can retire in the coming years.
If those taking to the streets are looking for where the ultimate blame lies, in a way, it lies with all of us. Due to the economic success of the past few decades that allowed for tremendous leaps forward in medical technology and treatments, life expectancies in Europe are far longer than 50 years ago.
Mr Macron plans to raise the current retirement age of 62 to 64, done gradually by three months a year from September this year until September 2030.
In Germany, the current state pension age of 66 years old will increase to 67 by 2031, while the UK, the retirement age for men is due to rise to 68 after 2044. Italy's retirement age was restored to 67 at the start of this year. There are plans in place to raise this figure to 71 in future.
Economists argue it is the years in retirement that count. The length of time from the day you stop work until the day you stop breathing is what interests policymakers and actuaries.
The French are fortunate here — the average Frenchman spends 23 and a half years in retirement; for the average Frenchwoman, that figures is a little more than 27 years, according to the OECD.
Compared to other OECD countries, that is only bettered by Luxembourg. In the UK, the average man can expect 20.2 years of retirement and the average woman, 22.7 years.
Still, back in 1970, men in OECD countries had a 12-year retirement on average, while women could expect 16 years.
So, while life expectancy in OECD countries lengthens, governments raise retirement ages because, to put it bluntly, they can only afford for us to live for a set number of years after we cease to work — the pension pot is finite.
“When I started working, there were 10 million retirees; today there are 17 million and by 2030 there will be 20 million,” Mr Macron said this week.
“Do you really think we can continue with the same rules?”
Birth rates
There's also a growing problem at the other end of the life spectrum.
Birth rates in western countries have been falling for 30 years. For example, in France in 1991, there were 13.2 births per 1,000 people, while in 2021, there were 10.5 births.
Falling birth rates pose a particular problem in countries such as France, where current workers pay the pensions of today's retirees.
In the UK, the current age at which one qualifies to draw a state pension is 66. This will be increased to 67 between 2026 and 2028.
A further planned increase to 68, to be phased in by the mid-2040s, has been shelved until after the next general election.
Meanwhile, the UK government spends 5.1 per cent of gross domestic product on pensions.
It's a different picture in France, where the pension spending amounts to 14.5 per cent of GDP.
In Germany the state spends 10.4 per cent of GDP on pensions, which is close to the OECD average.
Meanwhile, OECD numbers show that Italy spends the largest proportion of its GDP on pensions at 15.9 per cent, with a state pension age of 67.
Pensions and retirement ages vary extensively, not only across OECD countries, but the rest of the world as well.
A study by the Blacktower financial management group puts Finland at the top of a survey of best pensions, pointing to the relatively high level of expenditure on public pensions, as well as a healthy percentage of the population that pays into a pension programme.
The study also found that at 74, Denmark had a relatively high age at which people chose to fully retire, and ascribed that to the country's strong healthcare system.
Contribution rates matter as well. According to Blacktower, with 33 per cent of the average wage packet in Italy destined to go into a pension pot, the country has one of the highest pension contributory system in the world.
Life, death and taxes
Much has changed and is still changing in the pensions sector, both public and private. Many governments are considering introducing automatic enrolment for new employees into company programmes, similar to the one already operating in the UK.
Ireland is on track to adopt an automatic enrolment programme next year.
“The principle underlying the scheme is to increase supplementary pension coverage, especially amongst those who have not joined a pension scheme due to inertia rather than unaffordability,” Irish Minister for Finance Michael McGrath said last month.
Others have tweaked their tax regimes to incentivise more saving into pension pots. Beyond that, in his recent budget, UK Chancellor Jeremy Hunt outlined tax changes designed to attract those who have taken early retirement back into the workforce.
But, of course, most governments are in the process of slowly raising the age at which the state starts paying people not to work.
It could be argued that Mr Macron has done this too fast and too publicly — much better to do it stealthily and over a longer period of time.
Nonetheless, with life expectancy improving and birth rates falling in many OECD countries, this is not something that any government with a long-term vision can afford to kick down the road.
