Retirement age must be raised, EU says

Monday 05 July 2010 15.45
Retirement - Life expectency to continue to rise
Retirement - Life expectency to continue to rise

European governments must consider raising the retirement age in their countries to ease pressure on public finances and prevent the explosion of their pension systems, the European Commission has said.

Weak growth, ballooning national debts and higher unemployment 'have made it harder' for all systems to make good on pension promises, the Commission says in a document to be presented Wednesday.

'Ensuring that the time spent in retirement does not continue to increase compared to time spent working would support adequacy and sustainability,' says the 'green paper' on pension systems.

'This means increasing the age at which one stops working and draws a pension,' it says.

'Prolonging working lives to reflect continuous gains in life expectancy over time would bring a double dividend: higher living standards and more sustainable pensions,' the Commission says.

In the last 50 years, life expectancy in the European Union has risen by about five years and could increase by another seven years by 2060, the paper says.

At the moment, there are four working-age people for every person over 65 years old in the 27-nation EU. The ratio will worsen to two workers for every person over 65 by 2060, the commission says.

On average, Europeans retired at the age of 61.4 in 2008.

Several European countries have launched pension reforms to reduce their public deficits.

France wants to raise the retirement age from 60 to 62 by 2018, a proposal that has brought workers to the streets in protest.

The Spanish and German governments are eyeing 67 as the new retirement age in their respective countries, up from 65 today.