How European countries are reforming pensions to tackle rising costs, worker shortages
German measures to incentivize workers to retire later come as governments across Europe are turning to pension reforms to address worker shortages and ease the burden on their pension systems.
Here is what other European countries are doing.
FRANCE
Almost half of all developed countries are expected to raise their official retirement age in the future, resulting in an average age of retirement of 66 years within the Organisation for Economic Co-operation and Development.
Nevertheless, this is a politically divisive topic, which can have a high political cost for governments, as the French example shows.
Left-wing and far right parties both want to roll back a 2023 pension reform that gradually raises the age at which a worker can claim a full pension to 64 from 62.
President Emmanuel Macron’s government only passed that reform after months of street protests by using constitutional powers to avoid a vote in parliament, where it would have likely failed.
SPAIN
Like Germany, Spain is also gradually raising the legal retirement age, which should be 67 by 2027, with exceptions for long working careers beyond 38 years and 6 months.
But as this reform adopted in 2011 is not enough to cancel out the social security deficit of the European Union country with the highest life expectancy, the government opted to extend retirement on a voluntary basis through financial incentives.
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The German and the Spanish labour ministries have been working closely since last year, when there was a workshop in Madrid in which Germany showed interest in these measures, which were first taken in Spain, a source at Spain’s Social Security ministry told Reuters.
For each year of delay in retirement in Spain, the pension allowance will increase by 4%. From the second year of delay, the amount increases at a faster rate.
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