With aging populations and increasing life expectancy in many countries of the world, public pension schemes are likely to be a heavy drain on the national treasury. This is the main concern of a report released on December 8 by the Organization for Economic Cooperation and Development (OECD).

The situation will be aggravated by the fundamental pension reforms that are expected to come into force in the U.K. in April next year. The reforms could result in pensioners running out of money. This is because the new policy will give people many options about how and when to spend their money, which could be harmful to both incomes and incentives to work.

The report proposes that the problem might be partially solved by raising retirement ages, reducing options for early retirement, and providing new incentives for workers to save for their own retirement by adopting automatic enrollment in private plans. By following this strategy, workers will work longer and contribute over a longer period to their retirement savings.

Another option is to adopt the French policy of making it mandatory for workers to contribute toward a pension pot for a minimum number of years in order to qualify for the state pension.