Early Retirement in Denmark

Abstract

ABSTRACTThe Danish Early Retirement Pension Scheme (ERPS) introduced in 1979 was intended to contribute to the reproduction of the social order and to the legitimation of the welfare state. The first objective was not achieved. Nevertheless ERPS reduced total unemployment by about 20% and thereby contributed to the positive image of the welfare state.Survey data show that the poorer the working conditions the stronger the probability that the eligible take early retirement. High rates of unemployment in industries with physically and psychologically onerous work increase the probability of early retirement. Taken together with employers' wishes for as large as possible a labour reserve and their ambivalent attitude to the total withdrawal of marginal workers, these findings render the debate about voluntary versus compulsory withdrawal from the labour market at best insignificant and at worse misleading.At the same time, ERPS has brought some unintended but quite considerable improvements to the lives of many recipients. These include better self-assessed health, increased contacts with family and friends and new leisure activities. Recently, however, there is evidence of an increase in economic deprivation among recipients, and early retirement pension levels have not kept pace with rises in industrial earnings or the cost of living.