As negotiations of retirement ages intensify throughout Europe, Denmark is once again leading the way. In Denmark, projections indicate that by 2060, men and women will retire at the age of 74. This large uptick is representative of Denmark’s forward-thinking efforts to adapt to changes in demographics and economic sustainability. The country intends to increase the retirement age to 70 by 2040. We hope this decision will be the first step towards matching public policy with the upward trend of life expectancy.
In comparison, many other European countries have much lower retirement ages—for instance, the average across seven OECD countries is 65.3 years. Greece, Luxembourg and Slovenia have the lowest effective retirement age for men and women at 62. In the same vein, Austria and Poland have the lowest retirement age for women at just 60 years, showing the sharp differences that still exist across the continent.
Current Retirement Age Landscape in Europe
Currently, Denmark’s policies on retirement are the most ambitious in all of Europe. The Baltic country’s government has proposed increasing the retirement age by seven years—applying to both men and women. By 2060, Europe will have closed the gender gap in retirement age almost completely. For Poland, Hungary, Romania and Turkey, traditional disparities will prevail.
The average effective retirement age, the only measure we’ve seen consistently reported for all countries, varies widely across Europe. The Netherlands is currently planning to raise theirs to 66.6 years, and the United Kingdom and Ireland have already made their respective increases to 66 years. Germany is not far behind, at 65.8 years, and Portugal is not much lower at 65.6 years.
Denmark’s commitment to increasing its retirement age aligns with findings from the OECD, which state that such measures are often “based on established links between the retirement age and life expectancy.” This relationship highlights the importance for countries to recalibrate their immigration policies to address changing demographics and economic interests.
Future Projections for Retirement Ages
In fact, by 2060, a full third of countries will need to raise their retirement ages by more than five years. Italy and Estonia will soon adopt a retirement age of 71. At the same time, the Netherlands, Sweden and Cyprus will graduate to 70. These changes are an important recognition of the need to maintain our pension systems as we are all living longer lives.
Austria and Poland are two of Europe’s most extreme examples of a gender gap in retirement ages. In these countries, men retire five years longer than women. Nevertheless, as many countries in Europe and beyond adopt these reforms, we hope that these differences will be reduced.
Estonia, Slovakia, Italy, Sweden, and Cyprus are expected to raise their retirement ages by five years or more by 2060. This is an encouraging development that signals a developing trend towards greater alignment of retirement policies right across Europe, while respecting national contexts.
Implications of Increased Retirement Ages
The implications of these changes are dramatic both for the emerging labor market and social welfare system. As populations age and life expectancy increases, countries around the world are grappling with this challenge. They need to avoid walking the tightrope between workforce participation and pension sustainability. Raising retirement ages can avoid or offset some of the damage from the twin forces on public finances coming from more retirees.
Denmark will gradually increase the retirement age to 74 for men and women. This executive action is a powerful acknowledgement of the need for systemic change to respond to changing demographic realities.
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