More years of work, lower pensions
Retirement age increases to 72.5 years for today’s teenagers entering the labor market in 2030
Today’s teenagers, the children born during the debt crisis of the previous decade, who will enter the labor market around 2030, will be able to retire at the age of 72.5 having worked at least 38.5 years, according to the European Commission’s 2024 Aging Report – Economic and Budgetary Projections for the EU Member-States 2022-2070.
Moreover, the increase in life expectancy, combined with limited births and an aging population, means that the statutory retirement age in Greece will rise from today’s 62 years – after 40 years of insurance – to 67.5 in 2070. Even in the medium term, in 2030, the increase of the general limit from 62 and 40 years of insurance will rise to 63.5 years (always with 40 insurance years).
The general age limit from 67 years in 2022 will reach 68.5 years in 2030 and 72.5 years in 2070, which means that today’s teenagers will be forced to stay in the labor market far longer.
As the EU report shows, in 2022 the average retirement age was 63.8 in 2002. In 2040 it will be 66.4 and 67.9 in 2070.
Accordingly, while in 2022 someone who retired should on average have paid contributions for 31.9 years, in 2040, due to the consequences of the fiscal crisis and high unemployment, the average threshold for paying contributions will drop to 31.5 years, but rise to 38.4 years in 2070.
What’s more, the amount retirees will receive will be significantly reduced. Thus, while in 2022 the pension replacement rate is at 76% of income, it will decrease to 65% in 2040 and reach 53% in 2070.
This is an important reason, along with limiting early retirements and the creation of the Supplementary Social Security Fund (TEKA) that the net pension expenditure is estimated to reach 10.6% of GDP in 2070, while in 2022 it was at 12.6% of GDP.
Greece is one of the few countries that has already linked the course of the general retirement age limits with the course of life expectancy, having as a condition their review every three years.
The study also predicts the reduction of the population of Greece from 10.438 million in 2022 to 7.777 million in 2070 and the deterioration of the dependency ratio of the elderly which increases from 39.0 in 2022 to 74.4 in 2050, to then decrease to 66.0 in 2070.
