European pensionable age to be raised

According to the European Commission, the retirement age within the European Union member countries should constantly rise. The Commissions “white-book” includes, that in the pensionable age should be connected to life expectance. Retirement benefits are for one out of four people in the EU the main source of income. Without a stable system of retirement benefits, millions of people could suffer from old-age poverty.

The challenges are the increasing life expectance, low birth rates and consequently a shrinking employed population. Whereas in the year 2008 four earning capable people (15 to 64 years old) came to an older than 65 year old person, this relation will decrease to two to one in 2060.

Thus the Commission calls upon the EU member countries to connect the retirement age to the increasing life expectance of their inhabitants, to restrict the possibility to retire earlier and to equalise the so far shorter work life of women to the one of men. However, the EU Commission is not allowed to force their suggestions in pension-policy to their member states, but only to recommend.

Especially in times of bad economic conditions, pension funds put national households under pressure. At the moment annuity payments account for 10% of the GDP in average, but this amount will rise to 12.5% in the year 2060, the Commission expects.

Although the member countries are facing similar demographic challenges, there partly appear big differences. In Ireland the pension payments equal 6% of the GDP, however in Italy it is around 15%.

The Commission calls on the countries to adjust their labour economics for older people. Furthermore money of the EU social fund should be used to integrate older people into working life.

The following table shows the pensionable age of some countries. On the right side is the statutory retirement age and on the left side the acutal age. People from South Korea together with Japan and also Sweden are working longer than they have to, whereas you can find big differences in many other countries.

Sources:

http://www.handelsblatt.com/politik/international/eu-kommission-laender-sollen-rentenalter-erhoehen/6218464.html

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5 thoughts on “European pensionable age to be raised

  1. This article is very interesting for me. Because i dont know if in our country, when i will retire, get the pensions.
    In our country are very poor pensions. Already a young and active people asking when, if ever they may go to retire.
    The minimum requirements for entitlement to retirement pension are:
    • age 58, which is for both sexes and the completion of 40 years of pensionable service (male) and 38 years of pensionable service (women);
    • 20 years of pensionable service (for both genders) and age 63 (men) or 61 (women);
    • 15 years of insurance (for both genders) and age 65 (men) or 63 (women).
    This case can be taken even that will be the years of pensionable service continue to rise, and retired to fall, whereas the less active population, which would indirectly and nutrient state retirees.

    According to the OECD in 2050 on average in Europe, the ratio of retirees and employees approaching 1: 1, which we find ourselves in a trend of significant decline in the standard of living of the population.
    Therefore, additional saving for retirement in the third pillar, which assume an increasingly important role in maintaining the standard of living after retirement. The most appropriate way to fill the pension gap is long-term savings in mutual funds or investment protection with low sum insured. However, the long-term savings can begin, you must know the amount of your pension.

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  2. In my opinion the decreasing numbers of earning capable people that come to an older than 65 year old person are frightening. The proportion of 4:1 that we had 2008 is already very low, but with a proportion of 2:1 or even 1:1 as it is expected for 2060 it is impossible for our retirement systems to face with that.
    From my point of view it is the right way of the European Commission by trying to find a point the countries can work on. But I am not sure if the rise of the retirement age will really bring more good than harm.
    We are already in a time where the unemployment rate is on the top and especially the youth unemployment rate is dramatically high, with the help of keeping the older people longer in the working life it would be even harder for young people to get a job.
    To my mind the governments should be careful by making a decision according to the retirement age because maybe it would be better to work on the youth unemployment rate before.

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  3. Very interesting article! I think to cope with an increasing elderly population it is necessary to raise the pensionable age. For instance the government in Norway decided in 2001 to make a reform in the pension system. The retirement age is when you have turned 67 years. However you have the possibility to retire when you have turned 62, but you will get less money in the pension. If you want then you can work until you have turned 75 years, and you will get more money as a compensation for staying longer in the labour market. I think the system about flexible retirement is a good solution trying to solve the problem. Everyone can decide when and how much money they will get

    If there are not done any changes to the pensionable age more percentage of the GDP will be used to cover the pensions for the people who are retired. If that happens, many countries need to save the money from other welfare benefits.

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  4. I can´t understand why a person who worked until the age of 65 now should work until the age of 67. There is a big contradictoriness between jobless youth and raising the pensionable age. Youth should also have a chance at the labour market. If people who had worked their life very hard, in my opinion it´s better to reduce the pensionable age. So for the youth would be more jobs. Many youth are frustrated, because they find no jobs and so there is no future for the youth. The longer people has to work the less jobs are for the youth.

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  5. I can understand that slowly the pensionable age has to be raised in the countries comparing to the longer life expectancy. As well thru the demographical change we need the older people as workers. As well older people have a lot of working experience, which they can give to younger people, so a mixed working group emerges. But I see a problem to equalize the shorter working-life of women to the one of men. I mean at the one side they want that the birthrate raise, but as well the women have to work as long as the men. This just can mean the men stay at home and do childcare more than now days. But for sure it has to be watch that no old-age poverty accrues. The retirement people shouldn´t suffer, after working an enormous time of their life. Yes it is getting more expensive for the state if the people staying a life a long term after retirement. But the retirement benefits should be fair comparing to their working life, the maintenance cost and to the gross wage. But it needs to find a solution not all percent of the GDP can be used for the retired people or the young people have to suffer.

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