Bracing for a New Wave of Retirees.

Countries throughout the world are struggling with a changing retirement landscape.

A United Nations agency warns that about 90% of the world's working-age population is at risk of retiring into poverty because of inadequate pension benefits.

A report issued by the Geneva-based International Labor Organization concluded that many pension schemes in the developing world are in financial difficulty "simply because of an inability to collect all the revenues due to them, to invest any reserves wisely or to pay benefits promptly and in full."

The labor organization also noted that many wealthy countries are being forced to reduce retirement benefits to maintain the financial viability of their systems, either by raising the age at which benefits can be collected, requiring more years of work to qualify for certain benefits or reducing the generosity of cost-of-living increases for retirees.

Member countries of the Organization for Economic Cooperation and Development--which includes developed nations in North America and Europe as well as Japan--already are spending 10% of their gross domestic products on retirement benefits, said Colin Gillion, head of the International Labor Organization's social security department. This figure, which already exceeds the Organization for Economic Cooperation and Development spending on health care, is continuing to rise as populations age.

The International Labor Organization said that "there is almost no country throughout the world where the reform, development, adjustment, improvement or modification of pension schemes does not appear on the political agenda. Within the next few years, the international landscape of income protection in old age may have changed beyond recognition."

The report points out that a surprisingly large number of Asian countries don't have mandatory pension schemes. But Hong Kong is instituting one, China is planning to overhaul its pension programs, and Thailand recently established a retirement program for salaried employees. India and Malaysia are undertaking or contemplating partial conversion of their national provident funds into pension programs.

The International Labor Organization said countries in the Organization for Economic Cooperation and Development should increase retirement ages and the number of working women to relieve financial pressure on their pension systems. Encouraging more women to work would increase the number of workers paying into the system, but it warns that raising retirement ages could lead to increased spending on disability and unemployment benefits for the older workers.

It also warned of what it described as "one of the most fashionable panaceas" for relieving the financial burden on pension systems--investing pension funds in the stock market.

"Investing in financial markets is an uncertain and volatile business," Gillion said. Under such plans, "people may save up to 30% more than they need--which would reduce their spending during their working life, or they may save 30% too little--which would severely cut their spending in retirement. Which way round cannot be foreseen at the beginning of a working life."

Daniel Pruzin is a Geneva-based correspondent.