Increases in normal retirement ages underline impact of longevity

New data has highlighted the broad increase in social security retirement ages as national governments move to reduce their social security costs in response to increased life expectancy.

The research, by Mercer, analysed changes in normal retirement age (NRA) across 47 countries.

Giles Archibald, Mercer's global head of international retirement services, commented: ‘The twin pressure of increasing social security costs and lower mortality rates are driving changes in retirement provision. An increase in state retirement ages is only part of the response. In the private sector, companies are moving away from defined benefit towards defined contribution and hybrid plans to control costs and risks. This is in parallel with changes to plan governance and funding requirements.’

“Passing pension legislation faces the enormous challenge of politicians seeking to retain the support of their voters. Recent strikes and disturbances in France have highlighted the sensitivities involved but also underline the seriousness of the issue.

Yvonne Sonsino, head of Mercer's international retirement business

Archibald continued, ‘Governments are increasingly looking to the private sector to supplement social security - placing more pressure on employer resources. However, as social security is eroded, so innovative company-sponsored retirement plans are becoming a more attractive tool for companies to recruit the best talent and remain competitive.’

Yvonne Sonsino, head of Mercer's international retirement business in the UK, commented: ‘Western Europe is in a particularly difficult position with an aging workforce and a history of generous social security provision. Passing pension legislation faces the enormous challenge of politicians seeking to retain the support of their voters. Recent strikes and disturbances in France have highlighted the sensitivities involved but also underline the seriousness of the issue.’