Regulating the retirement age—Lessons from Nordic pension policy approaches

Abstract

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.

NGEU and Vaccines Strategy in the Wake of the COVID‐19 Pandemic: Outgrowing the Regulatory State

“…The few countries that do have initiatives related to pensions, such as Spain, focus on mitigating inequalities in old‐age. Spain, but also Sweden, is increasing the pension age (von Nordheim and Kvist, 2022 ). In other areas where the EU has been active in the past, such as social investment, substantial investments are planned.…”

Early Exit Decisions in Finland: Investigating the Limbo between Unemployment and Retirement

“…Addressing unemployment and early exit among workers aged 55 and over is a central concern for Finland, where unemployment near retirement is higher and the effective retirement age is lower than in other Nordic countries (OECD 2020). In 2019, the average exit age in Finland was 63.9 for men and 63.5 for women, whereas in Sweden, Denmark, and Norway, these numbers varied between 65 and 66 for men and 64.1 and 64.7 for women (von Nordheim & Kvist 2023). Despite increasing retirement age and pension reforms, Finnish workers continue to retire earlier than their expected retirement age, partly due to unemployment in late career (Riekhoff 2018).…”

Late Work in Sweden: Exit Pathways Express Unequal Exclusion Risks

“…These are due to pension reforms undergone since the 1990s, a universal welfare state regime and active and inclusive labor market policies (Aidukaite et al 2022;Halvorsen 2021). Increased retirement age has recently been linked with longer life expectancy, prolonging working life (Von Nordheim & Kvist 2022). However, a postponed retirement or receipt of pension does not necessarily prolong working life for all social groups when considering alternative exit pathways and precarious work with employment discontinuities.…”