Pension reform: where are our European neighbors?

As in France, several European countries have undertaken to reform their pension systems,
mainly due to the aging of the population. To date, the French are among the Europeans who leave the labor market the earliest, behind the Luxembourgers (who retire at the age of 60.2 on average), according to data from the European Commission.

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However, the government wants to postpone the age from which a worker has the right to retire (legal age) to 64 years. However, this age does not guarantee full retirement without a discount. It is also often accompanied by exceptions allowing people to leave earlier, in particular for people who started working very young. It is therefore more relevant to compare the actual retirement age. On average, people in the EU retire at age 63.8.

In Italy, a legal age at 67 and departures at 62

Italy, which is going through a major demographic crisis, is, together with Japan, the country with the highest average age of the population in the world : more than 23% of Italians are over 65 years old. The share of pensions in public expenditure is consequently very high, the pensions of the 16 million Italian pensioners representing 17% of GDP. By 2050, the country should have as many active people as people who are not, or no longer, of working age.

To preserve the pay-as-you-go system, the government of Mario Monti decided in 2012 to postpone the age from which a worker is entitled to retire at 67 (66 years and 7 months for women). A reform relaxed in 2018 by the government of the League and the 5 Star Movement. Today Italians can retire at 62, provided that their counter shows 41 years of contributions by the end of 2023. This measure is however temporary, a structural reform called for by the OECD and the European Commission, is planned next year.

The minimum pension has also been slightly raised for those aged 75 and over (from 525 to 600 euros). Of the 16 million pensioners, nearly 32% receive less than 1,000 euros per month.

In Germany, towards a departure at 69?

In Germany, the legal retirement age is currently set at 65 for people born between 1947 and 1964. But, by 2029, it will definitely rise to 67. According to economists, this will not be enough to save the PAYG system because life expectancy is increasing in the country, already affected by a demographic crisis: the fertility rate collapsed in the early 1970s and young working people are not numerous enough to offset the retirement of baby boomers.

The Bundesbank has recommended raise the retirement age to 69 for workers born after 2011. Otherwise it will be impossible to maintain pensions at full rates in the future, says the German central bank.

Former Chancellor Angela Merkel promised to maintain a pension level equivalent to 48% of salary and a social contribution rate of less than 20%, but the health crisis has weighed on state finances, complicating the financing of pensions. The current Chancellor Olaf Scholz, who had pledged not to push back the retirement age, is preparing a reform to facilitate naturalization and attract foreign workers in order to increase the number of contributors.

In Germany, the amount of pensions is 1,100 euros per month on average, a figure which hides strong disparities since men receive an average of 1,203 euros per month against 856 euros for women (net amounts for 2021). To improve their daily life, 11% of retirees continue to work. Between 2003 and 2005, the Hartz reforms created the status of “mini-job”, small jobs whose remuneration does not exceed 520 euros per month or 70 days of work per calendar year.

Departure age pushed back to 67 by 2027 in Spain

In Spain, a reform initiated in 2011 set the objective of gradually raising the retirement age to 67 by 2027. Since January 1, you must be 66 years and 4 months old to receive a full pension.

More than the starting age, it is the pension amount which is debated. In theory, employees can expect to continue to receive almost 80% of their income. But, in fact, 60% of retirees receive pensions of less than 1,000 euros. After many months of protests, pensioners however obtained their inflation indexation in 2021.

Retirement age today and tomorrow, by country
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Pension reform: where are our European neighbors?