Early Retirement Schemes Research Articles

The causal effect of early retirement on medication use across sex and occupation: evidence from Danish administrative data.

We examine the causal effect of early retirement on medication use using Danish registry data. A reform in early retirement schemes in 2006 gradually increased eligibility ages from 60 to 64 differentially across birth cohorts. This enables an instrumental variable design that was applied using novel g-estimation methods that alleviate bias in binary outcome IV models. Our data allow studying patterns in the short run (ages 59½-60½) and in the long run (ages 57-63). For those who were eligible already at age 60, retirement did not change overall medication use. However, when investigating medication and population subgroups, we see that painkiller use decreases and hypertension medication as well as mental health medication use increase after retirement in almost all population subgroups. Moreover, males as well as the blue-collar occupation subgroups do show decreases in overall medication use after early retirement. In conclusion, our analyses reveal that retirement can have important heterogeneous health effects across population groups and are potentially informative about the welfare benefits of social insurance more broadly.

Drivers and patterns of early retirement in the neoliberal university

AbstractThis article increases understanding of university labour processes. The antecedents and characteristics of early retirement schemes implemented by Australian universities between 2010 and 2020 were considered. Twenty-eight schemes were identified across 20 universities. Content analysis of descriptions of the schemes contained in official documents was undertaken. This revealed somewhat common justifications for the schemes, linked to concerns about organisational sustainability/resilience in the face of external threats and the implementation of modernising efforts. Such justifications appeared to be underpinned by similar ageist biases on the part of management. Despite this broad commonality, however, the schemes manifested a multifurcation of possible work-retirement pathways across institutions. Such reorganisation of labour processes, based on ageist representations that potentially place established workers in conflict with others, represents an incongruence between the market-oriented objectives of universities and areas of public policy responding to workforce ageing. It is argued that drawing momentum from emerging conceptions of sustainability and current diversity initiatives such as Athena Swan and Age Friendly Universities it may be possible to sever the link university leadership perceive between the divestment of older workers and the fulfilment of modernising agendas.

Work-retirement transitions and mental health: A longitudinal analysis of the role of social protection generosity in 11 countries.

This study aimed to analyse the effect of work-retirement transitions on post-retirement mental health in individuals with different working conditions in late working life. The focus was on transitions that involve the use of social protection schemes to bridge the gap between the exit from work and retirement, and the extent to which the generosity of such schemes is related to mental health after retirement. Individual-level panel data from the Survey of Health, Ageing and Retirement in Europe for 11 European countries were analysed using structural equation models. A total of 1642 individuals who worked in 2004 or 2007 and who retired in 2013 or 2015 were included in the analyses. The outcome measure was mental health as measured by the EURO-D scale. Respondents with a 'high strain' and 'passive' work situation have a significantly higher likelihood of using social protection schemes, such as early retirement, sickness, disability and invalidity schemes before retirement. The generosity of such schemes has a significant positive relation to post-retirement mental health. This study shows that the generosity of early exit pathways is important for post-retirement mental health, especially for individuals with adverse working conditions at the end of their working lives.

Financing Problem for an Early Retirement Scheme

Financing Problem for an Early Retirement Scheme

Social Investment in an Age of Austerity: A Comparison of Family Policy Reforms in Four European Countries

The focus of this article is on family policy reforms in four European countries – Austria, Finland, Portugal, and Slovenia – between 2008 and 2015. These years were marked by the ‘Great Recession’, and by the rise of the social-investment perspective. Social investment is an umbrella concept, though, and it is also somewhat ambiguous. This article distinguishes between different social-investment variants, which emerge from a focus on its interaction with alternative social-policy perspectives, namely social protection and austerity. We identify different variants along the degree of social-investment: from comprehensive, over crowding out, towards lean forms. While the empirical analysis highlights variation, it also shows how there is a specific crisis context, which may lead to ‘crowding out’ of other policy approaches and ‘leaner’ forms of social investment. This has led to strong cutbacks in family cash benefits, while public childcare and parental leaves have proved more resilient in the investigated countries. Those findings are revelatory in the current Covid-19 pandemic, where countries are entering a next, possibly larger economic crisis. Key words: family policy; crisis; social investment; austerity; case studies denoted as the end of the ‘golden age’ of the welfare state, putting a halt to its expansion in post-war prosperity. Faced with low growth rates and rising unemployment, the recipe chosen by many countries was to ‘relieve’ labour markets. Alongside such measures as early retirement schemes, family policy was a key part of the reform programme and recourse to parental leave

Spending When Illiquid Savings Become Liquid: Evidence From Danish Wage Earners

This paper offers new empirical evidence on the marginal propensity to consume out of an unanticipated liquidity shock. A Danish 2012 policy reform reduced the incentive to retire early in order to increase labour supply but at the same time the policy released a substantial amount of savings from an early retirement scheme that were locked in the scheme until the policy change. By exploiting the fact that cohorts were affected differentially by the policy, this paper uses a difference-in-differences specification to estimate an average increase in the propensity to spend of 43 per cent. The estimated spending patterns are consistent with the notion of wealthy hand-to-mouth behaviour.

Are benefit reductions an effective activation strategy? The case of the lowest benefit recipients in Denmark

AbstractDecades of commitment to the basic principles of the Danish welfare state have been discarded with a new social policy reducing the benefits for people already at the bottom of the income ladder. The political intention is to increase job search via economic incentives that increase the gap between benefit income and market income. Using a panel dataset with benefit recipients, we show that the intended job search effect did not materialise to any significant extent; rather, the affected people became poorer because the vast majority of individuals could not respond to the economic incentives in the intended manner. Joblessness was not due to lack of incentives. This study confirms the importance of employability and self-efficacy, but it shows that health is an underlying variable that explains both of these factors and the recipients’ difficulties in getting a job. The results have two major social policy implications. Access to early retirement schemes should be easier for recipients who have serious health problems and therefore cannot respond to economic incentives, and there should be an increased focus on how to help the recipients without major health problems to develop self-efficacy.

The effects of retirement and labour market policies in Belgium

Using Belgian administrative data, we investigate the impact of retirement and labour market policies on activating and maintaining people in employment. We focus on policies aimed at increasing the labour market participation of older workers through retirement incentives, on the one hand, and providing training to the unemployed to enhance their skills for employment, on the other hand. The evaluated policies affecting the public pension system and early retirement schemes are found to be effective in maintaining people in employment. Training programs have a strong and persistent effect on the job-finding rate of the unemployed after the completion of training. This effect is found to be large enough to compensate the lock-in effect of the training.JEL classification: C41, D91, H55, J14, J21, J24, J26, J64, J68

The Boomerang of Female40: Seniority Pensions in Hungary, 2011–2018

In 2011, the Hungarian government introduced special seniority pensions (Female40): Females, who have accumulated at least 40 years of eligibility (related to the length of contributions), can retire at any age without actuarial benefit reduction. The elimination of other early retirement schemes in 2012 and slowly rising real wages made the policy change even more popular: the lifetime benefit was maximised at the earliest age of retirement. Since 2016, real wages have been growing rather fast; making delayed retirement attractive. Without being noticed by the public at large, Female40 has become a boomerang for its former beneficiaries as immediate retirement from 2014 causes losses rather than gains to the foregoing retirees.

Determinants of voluntary early retirement for older workers with and without chronic diseases: A Danish prospective study.

Aims: This study explored differences in determinants (i.e. health-related, work-related and social factors) of voluntary early retirement between older workers with and without chronic diseases in Denmark. Methods: Workers aged 56–64 years who were members of a voluntary early retirement scheme were selected from the Danish National Working Environment Survey (2008–2009) and were followed in a public register for four years. Cox regression analyses were performed separately for older workers with and without chronic disease to identify the associations between determinants and voluntary early retirement. To explore the differences between groups, an interaction term between the determinant and having a chronic disease was included in the analyses for the total population. Results: Among 1861 eligible older workers, determinants associated with a higher risk of voluntary early retirement included poorer self-rated health, more depressive symptoms, a higher physical workload, lower job satisfaction and lower influence at work. For older workers with a chronic disease (n=1185), the presence of work–family conflict was also associated with a higher risk of voluntary early retirement, whereas for those with no chronic disease (n=676), a poorer relationship with colleagues was an additional determinant. Higher emotional demands, a higher work pace and higher quantitative demands were not significantly associated with voluntary early retirement for either group. None of the interaction terms was found to be statistically significant (p>0.05). Conclusions: Determinants associated with voluntary early retirement did not significantly differ between older workers with or without a chronic disease in Denmark. We conclude that several health-related, work-related and social factors are important for prolonged labour force participation of older workers (with and without a chronic disease).

Healthier when retiring earlier? Evidence from France

ABSTRACTThis paper contributes to the literature on the health-retirement relationship by looking at the effect of retiring before legal age on health in later life in France. To account for the endogeneity of the early retirement decision, our identification strategy relies on eligibility rules to a long-career early retirement scheme introduced in France in 2004 that substantially increased the proportion of older workers leaving their last job before the legal age of 60 years. We find a positive correlation between early retirement and health problems among male retirees. However, we fail to find any significant causal effect of early retirement on poor health once we account for the endogeneity of the decision to retire before the legal age. Controlling for working conditions does not influence the effect of retirement and occupying a demanding job is harmful to health after retirement regardless of the retirement date. Similar results are found for female retirees.

Actuarial Neutrality and Financial Incentives for Early Retirement in the Austrian Pension System

AbstractThis paper takes a closer look at the existing early retirement schemes in Austria and analyses whether early retirement imposes a financial burden on the pension system (actuarial neutrality). Additionally, we compute incentive-neutral deductions for early retirement. These deductions reflect the view of the individual, who faces option of retiring earlier or working another year. Incentive neutral deductions would imply that an individual is indifferent between both. Our results highlight substantial differences between both measures. While the current deduction rate of 5.1% in the Austrian age corridor is, on average, close to actuarial neutrality, it is lower than the incentive-neutral deductions. This indicates that there are financial incentives for early retirement, which may arise due to the Austrian tax system. Additionally, we show that both actuarial and incentive neutrality differ substantially across socio-economic characteristics, such as gender, wages and (early) retirement age.

Need for recovery and different types of early labour force exit: a prospective cohort study among older workers

PurposeThis study examines the relationship between need for recovery (NFR) and labour force exit (LFE) among older workers. Different types of LFE (early retirement, work disability and unemployment) are considered, and the role of potential confounding and modifying factors, including the availability of early LFE schemes, is examined. Also, associations between NFR and the intention and ability to prolong one’s working life, which are known determinants of LFE, are assessed.MethodsA subsample of older workers from the Maastricht Cohort Study was examined (n = 2312). The relationship between NFR and LFE was investigated by means of Cox regression analyses. Logistic regression analyses were performed to investigate cross-sectional associations between NFR and the intention and ability to prolong working life.ResultsElevated NFR was associated with a higher risk of overall LFE during a 4-year follow-up period (HR 1.39, 95% CI 1.09–1.78), and specifically with a higher risk of leaving the labour force through early retirement and work disability. When early retirement schemes were available, strong and significant associations between NFR and LFE were observed (HR 2.79, 95% CI 1.29–6.02), whereas no significant associations were found when such schemes were unavailable. Older workers with a higher NFR also had earlier retirement intentions and lower self-assessed abilities (both physical and mental) to prolong their working life until the mandatory retirement age.ConclusionsBecause this study shows that NFR is a precursor of LFE among older workers, monitoring NFR is important for timely interventions aimed at reducing NFR to facilitate extended labour participation.

The effect of early retirement schemes on youth employment

The effect of early retirement schemes on youth employment

The Response Latency in Global Production and Logistics: A Trade-off Between Robotization and Globalization of a Chain

The vision of Industry 4.0 foresees also much lower time delays between activities and feedback control. Among factors which influence delays in supply chains are long distances between activities in a complex global supply chain and the response latency of older workers, in the case that there are no properly developed programs for avoiding this phenomenon. The analysis of a trade-off between these factors is the subject of this article. Mitigating the decreasing functional capacities of the ageing workforce, to keep the old workers’ productivity on the higher level while their functional capacities are decreasing, collaborative robots and smart workstations are advised. The second solution is to move a part of production to foreign countries where the demographic structure is in favour of young workers, and human resources are much cheaper. In the article, we are developing a model for a trade-off between two solutions: to invest in collaborative robots or to develop early retirement schemes and to move the production plants abroad. Therefore, the basic trade-off is between robotisation, keeping short distances between activity cells in a supply chain, and transportation costs which include also additional costs of delays in a system. The model is based on the skeleton of the extended MRP theory of Grubbström and Bogataj and evaluated by the NPV and, as a novelty, also by the actuarial present value APV in the criterion function. Extended MRP enables to extend the model of multi-echelon systems which is presented by the same authors in the International Journal of Production Economics, under the title: The ageing workforce challenge: investments in collaborative robots or contribution to pension schemes, from the multi-echelon perspective to global supply chains. The article explains why it is important to link the annuities for repaying the investment in robots to the flow of funds for workers’ salaries when weighing between early retirement and investment in collaborative robots. The model is applied to a real industrial case of the production of pumps and can be easily implemented also in other international supply chains where the differences in the demographic structure, salaries and automatization between countries are substantial and the eligibility of transport costs is questionable.

Changes in working life expectancy with disability in the Netherlands, 1992-2016.

Objectives Like other western countries, the Netherlands has abolished early retirement schemes and is currently increasing the statutory retirement age. It is likely that also older workers with disabilities will be required to work longer. We examine the change in working life expectancy (WLE) with disability of older workers by comparing data from three periods: 1992-1996, 2002-2006 and 2012-2016. Methods Data are from the Longitudinal Aging Study Amsterdam (LASA). Respondents aged 55-65 with a paid job at baseline were included (N=1074). Disability was measured using the Global Activity Limitations Indicator (GALI). First, a continuous-time three-state survival model was created. Second, WLE with and without disability were estimated using MSM and ELECT in R. The modifying effects of gender and educational level were examined. Results Among those initially in paid employment, total WLE increased over 20 years. For example at age 58, total WLE increased from 3.7 to 5.5 years. WLE with disability at age 58 increased from 0.8 to 1.5 years. There was no difference in WLE with disability between male and female workers or low- and highly educated workers. Conclusions Between the 1990s and the 2010s, subsequent generations of older workers with disabilities have extended their working lives. The findings emphasize the importance of workplace interventions that facilitate older workers with disabilities to maintain well-being and work ability. In addition, the question arises whether current exit routes out of the workforce are still adequate.

Recasting Pensions in Europe: Policy Challenges and Political Strategies to Pass Reforms

Recasting Pensions in Europe: Policy Challenges and Political Strategies to Pass Reforms

Retirement and cognitive decline. A longitudinal analysis using SHARE data

We show that a new measure of cognitive decline, that can be computed in longitudinal surveys where respondents perform the same recall memory tests over the years, is highly predictive of the onset of dementia. Using SHARE data, we investigate the way retirement affects cognitive decline over time controlling for age, education and other confounding factors. We find that retirement has a long-term detrimental effect on cognition for individuals who retire at the statutory eligibility age. It plays instead a protective role for those who retire on an early retirement scheme.

Institutional and socio-economic drivers of work-to-retirement trajectories in the Netherlands

ABSTRACTInstitutional exit pathways shape individual trajectories from work to retirement. In the Netherlands, early retirement schemes as well as disability and unemployment benefits structure the timing and complexity of transitions within such trajectories. Simultaneously, access to these exit pathways depends on the individuals’ entitlements to various social security programmes as well as their freedom to decide on the timing and path of exit. In this study, sequence analysis was applied to register data of primary sources of income with the aim of identifying the main trajectories from work to retirement between the ages of 56 and 66 for a sample of Dutch men and women born between 1943 and 1945 (N = 2,277). Seven distinct trajectories were found: ‘early retirement’, ‘premature retirement’, ‘late retirement’, ‘disability’, ‘unemployment’, ‘inactivity’ and ‘drop-out’. Multinomial logistic regression analysis was applied to investigate the relations of these trajectories with a set of individual and socio-economic characteristics, as well as factors at a firm level. Especially women, non-natives, the lower educated and the self-employed were found to have a greater risk of ending up in the ‘involuntary’ trajectories of late retirement, disability, unemployment and inactivity. Public-sector employees, farmers and craftsmen, and skilled blue-collar workers were less likely to differentiate from the norm of entering into premature retirement between the ages of 60 and 64.

Demanding occupations and the retirement age

We analyse unique Dutch survey data on the public's opinions on what are demanding occupations, on whether it is justified that someone with a demanding occupation can retire earlier, and on the willingness to contribute to an earlier retirement scheme for such occupations through higher taxes. We find that the Dutch think that workers in physically demanding occupations should be able to retire earlier. A one standard deviation increase in the perceived demanding nature of an occupation translates into a twelve months decrease in the reasonable retirement age and a 30 to 40 percentage point increase in the willingness to contribute to an early retirement scheme for that occupation. There is some evidence that respondents whose own job is similar to the occupation they evaluate find this occupation more demanding than other respondents, but respondents are typically also willing to contribute to early retirement of demanding occupations not similar to their own.