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By Maria Martinez
BERLIN (Reuters) – German measures to incentivize workers to retire later come as governments across Europe are turning to pension reforms to address worker shortages and ease the burden on their pension systems.
Here is what other European countries are doing.
FRANCE
Almost half of all developed countries are expected to raise their official retirement age in the future, resulting in an average age of retirement of 66 years within the Organisation for Economic Co-operation and Development.
Nevertheless, this is a politically divisive topic, which can have a high political cost for governments, as the French example shows.
Left-wing and far right parties both want to roll back a 2023 pension reform that gradually raises the age at which a worker can claim a full pension to 64 from 62.
President Emmanuel Macron’s government only passed that reform after months of street protests by using constitutional powers to avoid a vote in parliament, where it would have likely failed.
SPAIN
Like Germany, Spain is also gradually raising the legal retirement age, which should be 67 by 2027, with exceptions for long working careers beyond 38 years and 6 months.
But as this reform adopted in 2011 is not enough to cancel out the social security deficit of the European Union country with the highest life expectancy, the government opted to extend retirement on a voluntary basis through financial incentives.
The German and the Spanish labour ministries have been working closely since last year, when there was a workshop in Madrid in which Germany showed interest in these measures, which were first taken in Spain, a source at Spain’s Social Security ministry told Reuters.
For each year of delay in retirement in Spain, the pension allowance will increase by 4%. From the second year of delay, the amount increases at a faster rate.
THE NETHERLANDS
In the Netherlands, with a normal retirement age of 67 following gradual increases from 65 in 2012, the pension system was struggling until the country voted through a major overhaul of the system in 2023.
Interest rates and premiums were too low to allow funds to compensate for inflation, and the threat of cuts to benefits loomed large and this prompted the change.
Traditionally, Dutch workers and employers pay into private pension funds that promise a final pension at a specific level – an increasingly rare example of a “defined benefit” system.
However, last year parliament and the senate agreed to a restructuring of the country’s 1.45 trillion euro ($1.60 trillion) private pension industry, Europe’s largest, that will see funds ditch the promise of guaranteed benefits to shift to a “defined contribution” system by 2028.
ITALY
Italy spends more than any other European country on pensions except Greece, and the treasury expects outlays will top 17% of GDP in 2040.
An unpopular reform adopted at the height of the financial crisis in late 2011 gradually increased the statutory retirement age to 67.
However, a temporary regime in place until the end of 2024 allows people to retire if they are at least 63 years old and have worked for 41 years, with the sum totalling 104.
Meloni’s government must decide whether to extend this scheme for next year. Different measures are being discussed, but there isn’t a permanent solution in sight to alleviate its struggling pension system.
($1 = 0.9045 euros)
(Reporting by Maria Martinez in Berlin, Belén Carreño in Madrid, Leigh Thomas in Paris, Stephanie van den Berg in Amsterdam and Giuseppe Fonte in Rome; Editing by Madeline Chambers and Emelia Sithole-Matarise)