The Covid-19 pandemic has increased the risk that people will not be able to save enough for their retirement, according to a new OECD study.
The economic impact of the crisis and the shutdowns that many countries have adopted in an effort to halt the spread of the virus has affected the ability of workers and their employers to contribute to private retirement plans, the the OECD Pensions Outlook 2020 says. It also warns that the liabilities of defined benefit schemes, which guarantee a level of retirement benefits are likely to grow.
On the upside, wage and unemployment supports mean that people will not have lost out on their entitlement to a state pension when they retire, the report says. but the money governments have had to spend on such schemes will weigh on the State’s ability to fund state pensions, which are already under press as people live longer.
The annual report looks at the impact of Covid on pension schemes across all OECD countries as well as a number of others.
Even before the outbreak of the pandemic, the report says that retirement savings and old-age pension systems were facing “significant challenges”.