Efficient fiscal policy to ensure income security for the elderly

An ageing population and the growing need for support for elderly retirees have put public finances under pressure. This paper examines how countries can strengthen income security in old age through efficient fiscal policies, considering not just income flows but also wealth during retirement. As many older people hold significant assets, particularly housing, income alone does not fully capture financial well-being. Drawing on experiences in selected OECD countries, the paper explores concrete options for targeting financial support during retirement, considering both income and wealth. The paper also explores how annuities and reverse mortgages can allow individuals to convert existing assets into additional retirement income, reducing the need to draw on public finances. The analysis suggests that, while these tools have the potential to complement public pensions and help manage financial risks, they remain underused due to informational, regulatory and market challenges. The paper highlights practical experiences with overcoming these challenges, including providing clear information, ensuring appropriate safeguards and offering supportive market conditions to facilitate uptake, drawing on a range of experiences across OECD countries.