Britain risks labour shortages and economic slowdown unless the government changes its policies on pensions and retirement, the world's leading economic think-tank has warned.
According to the Paris-based Organisation for Economic Co-operation and Development (OECD), Britain needs to raise the pension age from 65 to 70 to keep more people in work and avoid "a pronounced slowdown in economic growth".
Britain should also "abolition of mandatory retirement ages unless objectively justified," it said.
But the government ruled out a rise in the retirement age earlier this month after protests from trades unions.
The OECD also joins the long list of experts who have called on the government to provide a higher level of basic state pension and attacked current policies for their complexity and for penalising those who try to save for their retirement.
"The current two-tier state pension system and the array of means-tested benefits… may have adverse effects on incentives to work and save", the reports states.
Here, both the Pensions Policy Institute and the National Association of Pension Funds have called on the Government to replace the current pension system with a simple, flat rate Citizen's Pension.
But the OECD's report on Ageing and Employment Policies also castigates Britain on its record of employing older people. "Unless there is a substantial increase in labour force participation, especially among older people", it says, the labour supply "will remain broadly stagnant in the UK over the next 50 years. This could lead to rising labour shortages."
The report also criticises the UK for the number of people who do not appear in the unemployment statistics because they are on incapacity or long-term sickness benefit. The government should "take further steps to prevent disability-related benefits being used as a 'de facto' early retirement scheme", it said.