Antolín, the principal economist at the OECD’s Private Pension Unit, is perhaps more comfortable thinking about policy issues than dealing with the press, but happily describes his work, vividly and with a surprising deal of professional passion. Currently he is seeking an answer to the very existential question of how much, exactly, is enough.
This may sound a somewhat abstract pursuit, but it has direct relevance to your wallet. Consider that the average pensionable age in OECD countries is set to reach 65 for both sexes by 2050, an increase of about 1.5 years for men and 2.5 years for women. But life expectancy is rising even faster, meaning that in all but five OECD countries, time spent in retirement will continue to grow over the next decades (OECD Pensions at a Glance, 2011).
The forecast is forcing governments to reform pension policies to balance sustainability of pension systems with adequate income levels for future retirees. This raises the inevitable question; what is adequacy? Or in other words: how much, exactly, is enough?
Antolín is seeking an answer. Together with his colleague Juan Yermo, he is conducting a study into pension adequacy, backed by the European Commission. It’s a monumental task, he reveals, and not necessarily one that will provide the straightforward answers that governments sometimes look for.
Defining adequacy, he says, is not a question of how much is enough, but rather, how much is enough for whom.
“We understand that in the end, governments and policy-makers want to have just one number, but one number is wrong,” he says, again after some thought. “It’s quite complicated, but the answer will be different for different income groups, and it will be different for the different genders and economic statuses.”