ECONOMY

Life expectancy raising retirement age

life-expectancy-raising-retirement-age

The Organization for Economic Cooperation and Development (OECD) forecasts in its annual Pensions at a Glance report that the retirement age in Greece will have been increased by almost 1.5 years by 2035 and 2.8 years by 2050, due to the expected increase in life expectancy.

The trend is due to the automatic adjustment mechanism that was voted back in 2010 which, in the long run, leads to the reduction of pension expenditure in Greece by 2 percentage points. This means that Greece will go from spending the highest level (15.7%) of gross domestic product among EU countries in 2019, to 14.2% by 2025 and 12% in the distant 2070.

Under the growing pressure of the global Covid-19 pandemic, the OECD once again reiterated that the provision of economically and socially sustainable pensions in the future continues to be the biggest challenge for its member-countries. 

It also made it clear that while pensions were saved during the pandemic, their financing had deteriorated due to the loss of contributions. The shortfalls were mainly covered by state budgets. Putting pension systems, it notes, on a stable basis for the future would require new, painful political decisions.

Regarding Greece especially, the increase will start becoming visible from 2035, as the age limit will increase by almost 1.5 years. 

A similar future also awaits other countries that have also linked retirement age with life expectancy. Indicatively, the report shows that the retirement age of a 22-year-old entering the labor market is expected to increase by 4.5 years in Denmark and Estonia between 2021 and 2050 and 2.5 years in Italy.