How to best address pension adequacy and financial sustainability in the context of population ageing : the labour market as a key determinant

Against the background of population ageing pension debate has focussed for many years on the future increase of the so-called old-age dependency ratio, i.e. the number of older people against the number of people of working age. Incomprehensibly, this ratio is often misinterpreted as the ratio between workers and pensioners. Yet, wrongly equalizing the number of people of working age with the number of people in employment distorts the view of the most effective strategy with which countries can prepare for population ageing—which is improving the employment integration of those of working age.Referring to a study recently carried out in Germany the authors show that improving employment integration across all ages would help to significantly contain the future increase of economic dependency ratios and, thus, significantly support pension adequacy and financial sustainability.