Pension systems, designed when populations were younger and life expectancy shorter, are now under immense pressure. To mitigate the impact of an ageing population, governments around the world are starting to implement a raft of measures. While there is no one-size-fits-all solution, nations are amending pension laws and updating regulations to adapt to the changing demographics. Let’s delve into the details together to examine how countries are reacting to demographic shifts across countires.

In Argentina, the main pension system is the Argentine Integrated Pension System (SIPA), which is public and pay-as-you-go. However, there are 177 other systems that have special funds or special conditions. In the SIPA system, a minimum age of 60 is required for women and 65 for men. In other systems, the age is usually lower. On average, the retirement age is 63 but there is considerable variation, since 24% of men and 1% of women retire before reaching the minimum age, due in part to early retirement schemes for certain categories of workers. The pension system presents considerable inequality regarding retirement benefits. The main problem lies in the 30 years of contributions required to access a pension, which penalises those who do not reach this requirement. Due to issues of institutional design of the system and, above all, to broader social inequalities, this problem disproportionately affects women. One proposed strategy to address this is to develop a system with a non-contributory pillar that guarantees a coverage floor and a contributory pillar that reflects the contributions made throughout the working life of the beneficiaries. The law in Argentina stipulates that companies cannot force their employees to retire until they are 70 years old. This law was intended to encourage employees to delay retirement.

Belgium has taken a number of steps recently to address demographic shifts. It has increased the normal state pension age from the current age of 65 to 66 (as of 1 January 2025) and 67 (as of 1 January 2030). The criteria for taking the state pension early (age and career requirements) have also gradually become stricter in recent years. A ‘pension bonus’ system was recently introduced which grants an additional net amount on top of the state pension for those who continue to work beyond the age at which they can take early retirement. Whereas it used to be possible to take up occupational pensions before the state pension retirement age, the law on occupational pensions was changed to link the due date for the occupational pension to the state pension. In other words, the occupational pension is paid (usually in a lump sum) automatically when you take up your state pension. Occupational pensions thus will normally also be paid at 66 as of 2025 and 67 as of 2030.

The pension system in Denmark is generally considered to be one of the most sustainable in the world. One of the reasons is that in 2006, a cross-party political agreement was made to continuously review and increase the retirement age based on life expectancy. The retirement age is reviewed every five years, and overall there seems to be a common understanding between members of the Danish Parliament about the benefits of this system. However, as the retirement age has increased with every review since 2006, and as the younger generations currently face a retirement age of over 70, public debate about whether we have reached the limit has intensified. One of the questions on people’s minds is about whether a distinction should be made between manual labour and office work with regard to the retirement age. This debate has led to the introduction of two special schemes providing access to early retirement subject to certain conditions. One of the schemes deals with deteriorating health and the other, seniority in the labour market. Public debate on the sustainability of these early retirement schemes (given that the takers for them are increasing rapidly), in combination with an ongoing debate about the decreasing numbers in the workplace, has led to continued political focus on retirement. However, so far, the various initiatives being mooted are minor compared to the 2006 reform. They include tax benefits for retired employees working part-time in certain sectors (e.g. healthcare) and various schemes aimed at retaining elderly employees in some sectors of the labour market, such as additional days off.

In response to the challenges posed by an ageing population, Greece has implemented a series of pension reforms since Greece’s 2014 financial crisis. These include reductions in pension benefits, an increase in the retirement age, and a focus on supplementary pensions and social solidarity benefits. The Government recently presented the National Action Plan for Demography, focusing on five main pillars: supporting families, strengthening the workforce, managing longevity/ageing, improving quality of life and promoting growth. To stimulate the social security system, the government has recently taken the step of abolishing the pension deduction for working pensioners. This is designed to encourage continued work. Meanwhile, a new ‘special’ residence permit has been introduced to attract new migrant workers, with the aim of boosting social security inflows.

In 2024, a number of measures have been introduced, or plans to introduce have been announced, by the Government in response to recommendations from the Pension Commission. These include:

• Maintaining the State Pension age at 66 but introducing a new flexible pension age model. From 1 January 2024, people now have the option to continue working up until the age of 70 and defer claiming the State Pension (Contributory) in return for a higher pension rate at the later age. This change also has the effect of allowing people to improve their social insurance record and potentially increase their pension rate when they retire, along with allowing those who started working later in life to make additional contributions to qualify for a pension. While there is no corresponding obligation on employers to allow employees to continue working up to the age of 70, there will no doubt be an increase in the number of requests from employees to do so. Many employers, particularly those who still have a mandatory retirement age, may find this challenging.
• The Government recently announced plans to introduce legislation allowing an employee to stay in employment until the State Pension age, if they wish. The proposed legislation provides that, in general, an employer cannot set a compulsory retirement age below the State Pension age if the employee does not consent to retire.
• A move to a ‘Total Contributions Approach’ for calculation of individual pensions entitlements will be implemented on a phased basis over ten years from 1 January 2025.

With regard to private sector pensions, Ireland is adopting a new law requiring employers to automatically enrol qualifying workers into workplace pension schemes. The scheme will be co-funded by the employer and the state, and it will be administered by a Central Processing Authority rather than by the employer. Employers will have to meet minimum contribution rates. The new requirements will not apply to employees who are already members of a qualifying occupational pension scheme. Irish courts have taken the position is that having a mandatory retirement age is not discriminatory provided it is objectively and reasonably justified by a legitimate aim, and the means of achieving the aim are proportionate and necessary. While there had been a growing number of age discrimination cases where the courts emphasised the importance of considering mandatory retirement on an individual basis in determining whether it was proportionate, a recent Supreme Court decision held that there is no requirement to conduct a ‘case by case’ or individual assessment approach when setting a retirement age for staff.

Since 1995, there have been many reforms restructuring the pension system, including progressive increases to the pension age and requirements. Under the current system, pensions must be calculated based on contributions rather than earnings. The retirement age is 67 years for both male and female employees and that age is set to increase bi-yearly, in accordance with increasing life expectancy. Workers who have paid social security contributions for 42 years and 10 months for men and 41 years and 10 months for women are entitled to a pension regardless of their age (this is also subject to increase based on life expectancy). In recent years, measures (often temporary) have been taken to facilitate early retirement for specific categories of employees, including those whose tasks are stressful, notably women who have had children and workers who started working early in their lives. In addition, a new provision is aimed at facilitating a generational relay: employees who reach the requirements for pension in the next three years can stop working while the employer continues to pay monthly social security contributions. Simultaneously, the employer must hire employees not older than 35 years for a period of not less than three years. When an employee becomes eligible for old age pension, the employer is entitled to dismiss him or her without cause, in other words, the ordinary legal protection against unfair dismissal ceases to apply at that point. Before 67, an employee may opt to continue to work until 71 (with the usual protection against unfair dismissal), but only if the employer consents. If the employer withholds consent and tries to dismiss, however, this could still lead to a challenge for discrimination based on age, if age was the only reason to terminate the employment.

In response to demographic shifts in Mexico (an aging population and lower birth rates), the Government has implemented several pension amendments in the few years. The pension amendment of 2021 brought about significant changes to the pension system, including:

• The minimum required number of weeks of registered social security contributions to qualify for a state pension was reduced from 1,250 to 1,000. This adjustment addresses the prevalence of informal employment in Mexico, where many employees are not registered with the social security system despite being employed.
• The monthly pension amount was raised from MXN 3,289 to MXN 8,241. This increase aligns with the higher monthly contributions required from employers for employees registered with the social security system.
• The commission percentage charged by the Retirement Fund Administrators (AFORE), which is responsible for managing and investing employees’ retirement savings, was reduced.
• A new federal pension programme for the elderly provides monthly economic support to all individuals over 65 years old, irrespective of their social security contributions during their working years. In 2020, receiving this pension became a constitutional right.

Despite the above reforms, Mexico’s pension system remains unsustainable in the long run, as there is an inadequate contributor base to sustainably bolster pension disbursements. The pension system is also complicated by issues such as a lack of transparency and inefficiency in how pension funds are managed. Further, a substantial proportion of the labour force lacks access to any pensions framework.

The challenges that come with an aging workforce and increasing longevity have been on the political agenda for many years in the Netherlands and have led to several changes in Dutch law. The Dutch state pension age has been increased gradually from age 65 in 2013 to age 67 in 2024 – and the pension age is linked to life expectancy: for every 4.5 months increase in average life expectancy, the state pension age automatically rises by three months. The government announces the new state pension ages five years in advance, based on how life expectancy evolves. It was announced in 2023 that the state pension date will rise to age 67 and three months in 2028 and will remain at that level in 2029. Due to the increase of the state pension age, temporary measures were introduced in 2021 to enable employees with physically demanding jobs to retire up to three years before the state pension date, although that arrangement is set to end in 2025. This has caused the unions to demand the government to introduce a more permanent solution for this group of workers. Employer associations, by contrast, are in favour of solutions for those employees who do not reach the pension date in good health, but they wish to prevent the renewal of the early retirement schemes. With regard to private sector pensions, early retirement schemes, which once were common, have been limited since 2006. In addition, recent revisions to pension legislation have led to a shift from defined benefit to defined contribution schemes, with variable pension benefits. An employment contract in the Netherlands can automatically expire when the employee reaches the state pension age and the private pension age can be brought forward or postponed to bring this in line with the state pension date.

The state pension was reformed in 2016 with the aim of simplifying the system. Changes have also been made to equalise retirement ages for men and women. The Government continues to review the state pension age regularly, taking into account average life expectancy, among other factors. The state pension age will rise from 66 to 67 by the end of 2028. The Government recently announced various proposed reforms to private sector pensions that are aimed in part at increasing the level of private pension wealth among individuals to help support them over retirement. In addition, the Government is considering changes to minimum ‘automatic enrolment’ requirements to increase private pension saving. Proposed changes include reducing the eligible age for employees to be automatically enrolled into a pension scheme from 22 to 18 and widening the band of ‘qualifying earnings’ on which employee and employer pension contributions are paid. The Government also introduced tax changes in 2023 and 2024 with the intention of encouraging older employees to return to work or stay in work for longer. The changes were particularly aimed at keeping NHS doctors in the workforce. While in general, individual engagement with pensions is relatively low, there is increasing focus in the pensions industry and in government on individuals understanding pensions and how pension saving will impact their quality of life in retirement. This is an increasingly important issue as fewer retirees have valuable ‘defined benefit’ pension income in retirement.

Employees need to stay up to date about the priorities of the next generation, without losing focus on business needs. High turnover of staff is becoming a serious issue in terms of HR strategy, owing to the demographic crisis and a highly competitive labour market. Therefore, focussing on ESG, pay transparency and gender equality – to name but some of the features that are highly prized by Gen Z – will be crucial, and will give those employers that do so a competitive edge.