In response to the ageing and shrinking of the working-age population, the European Union has agreed ambitious goals for raising the employment rate and the exit age of older workers. This article traces the development of EU policy approaches and presents EU-15 figures on the state of affairs. Progress so far has been modest, but EU policies are expected to facilitate the emergence of better regimes of age management within Member States. In turn, this will help Europe move towards its employment targets for the working population aged 55 to 64 years.

With the Danish life expectancy indexing of pensionable ages as case, this chapter examines to what extent a policy that objectively can help avoid recurrent conflicts as well as large economic and social challenges, can be deemed a success, even though it fits poorly with the PPPE model, as it was adopted, tightened, and continued without involving major stakeholders, and is neither fair nor popular. After briefly introducing the demographic challenges to pensions and explaining the positive potential of linking the pensionable age to developments in longevity, the chapter presents the paradoxes of the Danish case. In 2006 Denmark was a rather unlikely candidate to take a vanguard position in pension reform. Its economic situation and the fiscal health of the pension system in no way necessitated such a policy. Raising the pensionable age did not fit the priorities of most of the political parties that supported its initiation. Even more remarkable: the policy was tightened in 2011 by a government in which the main parties had campaigned against it and it was first implemented (2014) and later continued (2020) by other reluctant governments. Given these oddities, the focus is on explaining which constellation of circumstances and actors allowed such a novel pension policy to be adopted and continued, how this conditioning affected its design, implementation and longer-term effects, and assessing to what degree and in what ways it has been, is and may continue to be a ‘successful’ policy in certain dimensions.

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The likelihood that longevity will continue to increase has generated a search for regulation that make people work longer as they live longer, and thus not just containing pension expenditure but also enlarging labor supply, economic growth, and tax revenue. In public pension policy, Nordic countries have led the world with three types of approaches aimed at making people retire later. The first came when Sweden, followed by Finland and Norway, installed life expectancy coefficients in benefit calculation formulas. The second followed as Finland introduced age-related accrual rates and the third when Denmark indexed the pensionable age to developments in life expectancy. Since economic incentive-based regulations failed to raise exit ages sufficiently, Finland and Sweden subsequently linked pensionable ages to life expectancy like Denmark. While this policy brings out inequalities in health and workability, the fact that countries found it necessary to index the pensionable age to longevity instead of just relying on economic incentives in regulating retirement behavior may hold lessons for other countries.

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