Increases in longevity and decreases in fertility have led to the aging of many countries’ populations and to increases in old-age dependency ratios, the number of those over age 65 to the number of workers (usually expressed as those between ages 15 and 65). At the same time, current interest rates in
many countries are at very low levels. These developments have increased concerns about the economic sustainability of current social security programs, resulting in pressure to modify their structure through reduced benefits and / or increased contributions, and in particular through an increase in their eligibility age (the age when an individual is eligible according to program rules to begin receiving full retirement benefits) that is the subject of this report. Simultaneously, these trends have increased pressure to contain the cost and manage uncertainty associated with defined benefit employer-sponsored pension plans, and created concerns regarding the ability of defined contribution plans to provide adequate retirement income.
Among alternatives considered in response to concerns about sustainability or affordability, many countries have increased or are considering increasing their eligibility age rather than reducing benefits or increasing contributions, both of which are usually deemed undesirable. This has usually been accompanied by an increase in the average age of retirement (i.e., when an individual chooses to leave the labour force).
