After they retire, European seniors are not drawing their pensions straight away. They are even leaving employment before the legal retirement age.
According to 2017 figures published by the Conseil d’Orientation des Retraites, the average effective retirement age in France is 62.5 years. But on closer analysis, this number represents the age at which entitlements become due, at which a person can begin to draw a pension. It does not align with the actual age at which seniors leave employment.
To measure the phenomenon we must turn to the average effective age of departure from the labor market, an indicator published annually by the OECD. In 2017 the figure in France was 60.6 years for men and 60.5 for women. This is 18 months lower than the legal retirement age and lower still than the pensionable age cited above. During this interlude with neither wages nor pension, seniors are relying on unemployment or invalidity benefits, or on the income of their partner, or else are in a pre-retirement phase financed by their former employer. Those who wish to keep working may experience difficulties doing so. But is this habit of leaving before the final whistle a French one alone?
18 European countries concerned
Obviously each country is different but one constant is apparent: among the OECD’s 26 European member countries, 18 have an average effective retirement age which is lower than the legal one. Gaps vary by country.
Italy has Europe’s largest gap. Italian workers leave employment 4 years before the legal age for men, and 5 years before for women. The country’s employment rate for 55-64s barely exceeds 52%, 8 points lower than the OECD average.
Further north, the Dutch leave the labor market between 2 and 3 years before the legal age. A fact that can be explained by, in particular, “restricted access to invalidity benefit”, says Simon Rabaté, economist at the Institut des Politiques Publiques. The Dutch reform in question dates from the late 1990s.
Conversely, in some countries the effective average retirement age is higher than the legal one. Examples include Portugal, Iceland and Sweden. On average Swedes leave the labor market at 66, one year older than the legal age. In this country with Europe’s highest life expectancy, reforms started in the 1990s and include a points-based pension which inspired Emmanuel Macron’s planned measure. Swedish workers can apply for pension benefits from at 61 but do not receive the “guaranteed pension” before 65. This corresponds to a quarter the average gross salary and complements seniors’ income where this is insufficient.
Towards a more direct work-retirement transition
These results must nonetheless be placed in a long-term context. Across Europe the gap between average effective retirement age and the legal equivalent is shrinking. In the OECD, people left the labor market at 63.1 years old on average in 2004, against 65.3 in 2017. The phenomenon can be explained by “the closing of pre-retirement schemes as well as the restriction of access to unemployment and invalidity benefits”, according to Simon Rabaté. We are therefore headed towards a “more direct employment-retirement transition”, adds the economist. The situation depends on public policy in each country (including increases to the legal retirement age, and reforms of unemployment benefit) and the degree to which businesses are managed in a “senior-friendly” way.