Early Retirement Schemes Research Articles

Psychosocial work environment and retirement age: a prospective study of 1876 senior employees.

Retention of senior employees is a challenge for most developed countries. We aimed to identify psychosocial work environment factors of importance for the retention of older employees by evaluating the association between the psychosocial work environment and voluntary early retirement in a longitudinal study. Data about work environment, health, and background factors came from the DANES 2008 questionnaire survey. We followed members of the Danish early retirement scheme for up to 4years in national registers-focusing on the age range, 60-64years, where early retirement was possible. We used Cox proportional hazard regression to analyze the rate of early retirement. The study included 16 psychosocial work environment factors. The following 10 psychosocial factors were significant predictors of early retirement in covariate adjusted analyses: Low job satisfaction, low influence in job, low possibilities for development, low role clarity, perceived age discrimination, low recognition from management, low workplace justice, poor trust in management, poor leadership quality, and poor predictability. No significant association with early retirement was found for work pace, quantitative demands, emotional demands, role conflicts, social community between colleagues, and trust between colleagues. Older employees with high job satisfaction, influence, possibilities for development, positive management relations, and jobs with no age discrimination remained longer at the labor market. However, we found no evidence that low demands or good relations between colleagues could influence older employees' decision on early retirement.

Gaining weight through retirement? Results from the SHARE survey

This paper estimates the causal impact of retirement on the Body Mass Index (BMI) of adults aged 50–69 years old, on the probability of being either overweight or obese and on the probability of being obese. Based on the 2004, 2006 and 2010–2011 waves of the Survey of Health, Ageing and Retirement in Europe (SHARE), our identification strategy exploits variation in European Early Retirement Ages (ERAs) and stepwise increases in ERAs in Austria and Italy between 2004 and 2011 to examine an exogenous shock to retirement behavior. Our results show that retirement induced by discontinuous incentives in early retirement schemes causes a 12-percentage point increase in the probability of being obese among men within a two- to four-year period. We find that the impact of retirement is highly non-linear and mostly affects the right-hand side of the male BMI distribution. Additional results show that this pattern is driven by men retiring from strenuous jobs and by those who were already at risk of obesity. In contrast, no significant results are found among women.

Retaining older workers – analysis of company surveys from 2005 and 2010

Purpose– The purpose of this paper is to shed light on developments in Norwegian companies’ active-ageing policies, and hence offer insight into what characterises those Norwegian companies offering measures to retain their older workers.Design/methodology/approach– The research questions are investigated using data from two surveys carried out among a representative sample of Norwegian companies in 2005 and 2010. The two data sets are analysed both separately and jointly, being merged to obtain a pooled cross-section data set. Both multivariate logistic and linear regression are applied.Findings– The proportion of companies offering retention measures, as well as the extensiveness of their retention efforts (the number of different measures offered), has increased considerably from 2005 to 2010. What characterises these companies however is surprisingly similar in 2005 and 2010. The retention efforts of Norwegian companies seem to be part of a holistic approach to active ageing. Offering a number of different retention measures is more common among companies having initiated “measures to facilitate lifelong learning” and “measures to prevent health problems or reduced work capacity”. The financial incentives embedded in the contractual early retirement scheme seem also to have a significant impact on retention efforts.Originality/value– The employers’ perspective has received little attention in previous research and the authors are the first to report on developments in Norwegian companies’ retention efforts over time. Knowledge about what characterises employers offering such measures will be important for future efforts to increase employments rates among older workers, which is an aim for most European countries.

Arbeidskosten en productiviteit van oudere werknemers

Labor costs and productivity of older workers: The view of Dutch employers in a European perspective Labor costs and productivity of older workers: The view of Dutch employers in a European perspective Perceptions about labor costs and productivity play an important role in the way employers behave towards older workers. This study addresses two main questions: What do employers see as possible consequences of an ageing workforce in terms of labor costs and productivity? And what organizational policies do European employers apply and consider in order to decrease labor costs or to increase labor productivity? To answer these research questions, we analyzed surveys administered to a total of 5,822 employers in Denmark, France, Germany, Italy, the Netherlands, Poland, Sweden and the United Kingdom. The results show that a considerable share of employers associate the ageing of their staff with a growing gap between labor costs and productivity; this is especially an issue in the Netherlands. ‘Employers expecting a larger gap do not more often apply organizational measures to adjust the cost-productivity balance, for instance, by means of training plans or demotion, although they more often seem to consider demotion. On the contrary, employers expecting a larger pay-productivity gap are more likely to apply early retirement schemes and accommodative measures. We conclude that organizational policies do not seem to be aimed at tackling a growing expected wage-productivity gap yet.

Workplace health promotion and labour market performance of employees

This paper investigates the average effects of firm-provided workplace health promotion measures on labour market outcomes of the firms’ employees. Exploiting linked employer–employee panel data that consist of rich survey-based and administrative information on firms, workers and regions, we apply a flexible propensity score matching approach that controls for selection on observables and time-constant unobserved factors. While the effects of analysing sickness absenteeism appear to be rather limited, our results suggest that health circles/courses increase tenure and job stability across various age groups. A key finding is that health circles/courses strengthen the labour force attachment of elderly employees (51–60), implying potential cost savings for public transfer schemes such as unemployment insurance or early retirement schemes.

Perceived qualities of older workers and age management in companies

Purpose– To explore whether the ages of human resources (HR) managers has an impact on their perceptions of the qualities/characteristics of older and younger workers (i.e., manager attitudes) and on the implementation of age management initiatives to the benefit of older workers (i.e., manager behaviors). The paper aims to discuss this issue.Design/methodology/approach– Based on theories concerning the origins of stereotypes and the concept of “in-group bias”, three hypotheses were tested on a sample of HR managers from 516 Italian companies extracted from the Gfk Eurisko database by using factor analyses and bivariate and multivariate tools.Findings– The age of an HR manager seems to influence his/her attitudes towards older and younger workers, because HR managers judge workers of a similar age to them more positively. In contrast, the age of an HR manager does not seem to play a particular role in the implementation of age management initiatives. In the companies considered, however, there is a tendency to adopt early retirement schemes when the HR managers concerned are younger, while in general there is a tendency to implement age management initiatives and show a greater appreciation of older workers in larger companies.Practical implications– The implementation of age management initiatives to the benefit of older workers may improve HR managers ' perceptions of those workers ' positive qualities. Furthermore, specific training may help HR managers recognize that both younger and older workers have useful albeit different strengths.Originality/value– This study provides new empirical evidence from the Italian context on the largely under-investigated issue of the role played by age in shaping HR managers ' attitudes towards older workers, and age management policies in particular.

Schwache Unternehmensinvestitionen in Deutschland? Diagnose und Therapie

Abstract Corporate investment has developed only moderately in Germany since the global financial market crisis. The capital stock made up of machinery and equipment has been in a stalemate since 2008. However, the notion of a quantifiable investment gap is not tenable. A recent survey of German companies provides important information about current obstacles to investment in Germany. On the one hand, the respondent companies suffer from increasing global uncertainties. On the other hand, the conditions for investment in Germany have deteriorated. Examples are the high-energy costs in international comparison and new labor market regulations like early retirement schemes and legal minimum wages. Instead of engaging in expensive investment programs, the German government should better tackle the homemade barriers to investment.

What Constitutes a Benefit by Virtue of Section 186(2) of the Labour Relations Act 66 of 1995? Apollo Tyres South Africa (Pty) Ltd v CCMA 2013 5 BLLR 434 (LAC)

The uncertainty surrounding the concept benefit as provided for in section 186(2) of the Labour Relations Act 66 of 1995 was created not by the courts but rather by the legislature. The concept is not defined and clearly has a wide ambit. In previous decisions the courts upheld a restrictive interpretation of benefits to maintain the divide between disputes of interest and disputes of rights and to ensure that issues that should be the subject of negotiation could not become issues that can be decided by an arbitrator. Previously the courts insisted that a benefit was something arising out of a contract or law. In the Apollo case the court had to determine what constitutes a benefit and if a benefit is limited to an entitlement which arises ex contractu or ex lege. The court found that the early retirement scheme was a benefit, although the employee at that stage did not have a contractual entitlement to the benefit and that the benefit was subject to the employer's discretion. What becomes clear from this case is that the unfair labour practice jurisdiction cannot be used to assert an entitlement to new benefits, new forms of remuneration or new policies. The Labour Appeal Court criticizes the distinction between salaries and remuneration drawn by our courts and describes it as artificial and unsustainable. Under the unfair labour practice regime the conduct of the employer may be scrutinized by the CCMA in at least two instances, namely when an employer fails to comply with a contractual obligation, an entitlement or right that an employee may have in terms of a statute, and secondly when an employer exercises a discretion under the contractual terms of a scheme conferring a benefit, including situations where the employer enjoys a discretion in terms of benefits provided in terms of a policy or practice - rights created judicially. This decision places the emphasis on the employer's actions and the unfairness of such acts or omissions.

Demanding Occupations and the Retirement Age

In several countries where pensions are reformed and the retirement age is increased, the issue came up to make an exception for workers with demanding occupations, since health considerations may make it unreasonable to expect them to work longer. We analyze 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. A representative sample of Dutch adults answered several questions about hypothetical persons with five different jobs. We use panel data models, accounting for confounding factors affecting the evaluations of the demanding nature of the jobs as well as their reasonable retirement age or willingness to contribute to an early retirement scheme. We find that the Dutch think that workers in 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 points 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 also willing to contribute to early retirement of demanding occupations not similar to their own.

Demanding Occupations and the Retirement Age in the Netherlands

In the policy debate on increasing the statutory retirement age, the issue has been raised to make an exception for workers with demanding occupations, since health considerations may make it unreasonable to expect them to work longer. We use unique Dutch survey data to analyze the general public’s opinions on what are demanding occupations, to what extent 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. A representative sample of Dutch adults answered several questions about hypothetical persons with five different jobs. Panel data models are used to analyze the answers, accounting for confounding factors affecting the evaluations of the demanding nature of the jobs as well as their reasonable retirement age or willingness to contribute to an early retirement scheme. The Dutch public thinks that workers in demanding occupations should be able to retire earlier. A one standard deviation increase in the perceived demanding nature of an occupation translates into a one year decrease in the reasonable retirement age and a 30 to 40 percentage points 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 also willing to contribute to early retirement of occupations that are not similar to their own.

Financial Incentives to Retirement in Belgium: What Policy Lessons?

The paper uses a rich administrative dataset on Bel gian older workers to provide new evidence on the impact of social security syste ms on retirement behavior. In addition to measures of financial incentives induced by the soc ial security systems, we construct an eligibility status indicator. This indicator flags individuals who satisfy eligibility requirements for early retirement schemes. We find that financia l incentives do not have a lot of explanatory power for the probability to retire. In contrast, being eligible for early retirement substantially increases the chances for an individu al to exit the labor force. Using these findings, we evaluate the impact of changes in the early retirement eligibility rules. These changes are shown to have important effects on the median retirement age of older workers.

Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France

In a context of population aging, reducing early exit from the labor force is a major challenge. In this domain, the role of unemployment insurance (UI) is probably underestimated and its statistical assessment remains insufficient. And yet, when considering a possible separation, it is likely that workers who are close to retirement, and thus their employers if they wish to reduce their workforce, care about UI. In particular, they are likely to care about whether or not, potential benefit duration is long enough to cover the time until retirement. This paper provides evidence in support of this hypothesis for some worker profiles. The analysis is conducted using data from the French employment agency over the period 2001 to 2005. It is based on a natural experiment: on January 1, 2003, the potential benefit duration of UI entrants was sharply reduced. Econometric analysis of the age patterns of UI inflow reveals that the age incentives provided by UI rules greatly influence labor market behaviors: dismissals of insiders close to retirement are often scheduled so that they can receive benefits until retirement. We estimate that the reform increased the mean age at job termination of workers dismissed close to retirement by 4months. Our findings confirm that UI rules have an impact on inflow into unemployment and that UI is viewed by some employers and/or some workers as an early retirement scheme rather than as insurance against the risk of job loss. Thus, addressing the issue of older workers' participation in the labor market requires consideration of the joint impact of UI and retirement system rules.

Early Retirement and Financial Incentives: Differences between High and Low Wage Earners

This paper investigates the impact of financial incentives on early-retirement behaviour for high and low wage earners. Using a stylized life-cycle model, we derive hypotheses on the behaviour of the two types. We use administrative data and employ two identification strategies to test the predictions. First, we exploit exogenous variation in the replacement rate over birth cohorts of workers who are eligible to a transitional early retirement scheme. Second, we employ a regression discontinuity design by comparing workers who are eligible and non-eligible to the transitional scheme. The empirical results show that low wage earners are, as predicted by the model, more sensitive to financial incentives. The results imply that low wage earners will experience a stronger incentive to continue working in an optimal early retirement scheme.

Distributional Effects of the Forthcoming Finnish Pension Reform – a Dynamic Microsimulation Approach

The Finnish pension system consists of earnings-related pensions (almost 90% of the total pension expenditure) and the national pension. The earnings-related pension system will undergo a major reform in 2017. The main objective of the reform is to ease the burden on public finances by extending working lives. The earliest eligibility age for old-age pension will gradually rise from the current 63 years to 65 years by the 1962 birth cohort. After that, the earliest eligibility age will be linked to the growth in life expectancy. The age-specific accrual rates will be unified after a transition period. The early retirement schemes will also be reformed. The level of the disability benefits will improve. The forthcoming reform has been analysed using the ELSI microsimulation model of the Finnish Centre for Pensions. The model is based on administrative register data and it covers both the earnings-related and the national pension system of Finland. ELSI is a model with dynamic ageing without behavioural adjustments. The behavioural changes resulting from the reform have been taken into account explicitly: the age-gender-specific behaviour is obtained from our macro model using a micro-macro link. The differences in transition probabilities between educational groups are extrapolated from the register data.

Demanding Occupations and the Retirement Age in the Netherlands

In the policy debate on increasing the statutory retirement age, the issue has been raised to make an exception for workers with demanding occupations, since health considerations may make it unreasonable to expect them to work longer. We use unique Dutch survey data to analyze the general public’s opinions on what are demanding occupations, to what extent 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. A representative sample of Dutch adults answered several questions about hypothetical persons with five different jobs. Panel data models are used to analyze the answers, accounting for confounding factors affecting the evaluations of the demanding nature of the jobs as well as their reasonable retirement age or willingness to contribute to an early retirement scheme. The Dutch public thinks that workers in demanding occupations should be able to retire earlier. A one standard deviation increase in the perceived demanding nature of an occupation translates into a one year decrease in the reasonable retirement age and a 30 to 40 percentage points 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 also willing to contribute to early retirement of occupations that are not similar to their own.

The effect of early retirement schemes on youth employment

The fiscal sustainability of state pensions is a central concern of policymakers in nearly every advanced economy. Policymakers have attempted to ensure the sustainability of these programs in recent decades by raising retirement ages. However, there are concerns that keeping older workers in the workforce for longer might have negative consequences for younger workers. Since youth unemployment is a pressing problem throughout advanced and developing countries, it is important to consider the impact of these policies on the employment prospects of the young.

How Effective are New Entrant Schemes for Farmers?

SummaryThe two main policy approaches to promoting structural adjustment in EU agriculture are Farmer Early Retirement Schemes and New Entrant Schemes for Farmers. The evidence suggests that the former do not represent value for money. We report the results of a farm business modelling exercise using a sample of Northern Irish farm businesses from the Farm Accountancy Data Network to compare and contrast ex ante the effectiveness of two alternative approaches to a New Entrant Scheme, a working capital installation grant and an interest subsidy on a farm development loan. The interest rate subsidy on a farm development loan appeared to provide much better value for money in that it resulted in consistently superior performance across all of the farm performance indicators used. These outcomes were achieved despite the assumption of a very modest return of 3 per cent on the investment in the farm business. We postulate that the benefits of the interest rate subsidy are associated with the potential dynamic impacts of the farm investments, linked to the long‐term effects of differences in age related lifecycle goals. The reform proposals for the post‐2013 CAP to assist the setting up of young farmers could potentially capture these farm business dynamic effects.

Promoting structural adjustment in agriculture: The economics of New Entrant Schemes for farmers

We examine the efficacy of incentives for new entrants to farming as an alternative to early retirement schemes for farmers. We briefly review previous studies on the effectiveness of Farmer Early Retirement Schemes in promoting structural adjustment in agriculture and conclude that the economic case for these schemes seems weak. We then employ a dynamic farm optimisation model, incorporating a realistic specification of farmer decision-making, on an original Northern Irish dataset to analyse ex ante the possible impacts of New Entrant Schemes. We find a more positive potential impact from these schemes, particularly the option of an interest rate subsidy on farm development loans. This is attributed to the dynamic effects of the farm investments associated with such schemes, a likely reflection of the long-term effects of differences in age related lifecycle goals. Younger farmers have a longer planning horizon and tend to invest more heavily in business growth than comparable older age groups.

The Role of Income Effects in Early Retirement

AbstractWe provide a long‐term perspective on the individual retirement behavior and on the future of retirement by emphasizing the role of (negative) income effects. We consider a political economic theoretical framework, with actuarially “fair” and “unfair” early retirement schemes, and derive a political equilibrium with positive social security contribution rates and early retirement. A reduction in the wages in youth, consistent with the recent labor market trends since the massive introduction of temporary jobs, induces workers to postpone retirement, and—in the “unfair” system—leads to lower contribution rates. A reduction in the growth rate of the economy has opposite effects on the retirement decisions, leading—in the “unfair” system—to more early retirement. Aging induces a negative income effect, but has also an opposite political effect on social security contributions and retirement decisions. For an actuarially “fair” social security system, we provide conditions for the political effect to dominate; in an “unfair” scheme, numerical simulations confirm a slight predominance of the political effect, as contribution rates increase. These results may shed some light on the future of early retirement in aging societies.

Social Security and Early Retirement: The Relationship Between Workers, Firms and Governments

ABSTRACTIn this paper we survey a number of theoretical and empirical studies in order to propose explanations to the fall of labour force participation at older age. Starting from the largely studied effect of social security schemes on labour supply, we explore the employers behaviour and the role of governments in the development of early retirement schemes. We show that early retirement is the result of a global agreement between firms and government where workers have incentives to early exit the labour market due to generous non actuarial benefits. Firms have an advantage to separate older workers because they are costly compared to young workers and governments hope that by pushing elderly into early retirement they will solve the massive unemployment problem.