June 20, 2024

Athens News

News in English from Greece

"Slap in the face" for future retirees: raising the retirement age

Created by DALL·E 3

The OECD’s Pensions at a Glance 2023 report estimates that the retirement age will be increased by four years for those young people now entering the labor market. This will happen due to an increase in life expectancy.

The forecast concerns those who will enter the labor market in 2022. OECD does not make an explicit projection for those currently eligible for a full pension in Greece, based on the general limit of 67 years (regardless of length of service)but it is clear that this period will correspondingly increase to 71 years, since life expectancy is linked to both the general statutory limit and the reduced full retirement limit (with 40 years of work experience).

Regarding the retirement age, despite the reforms that preceded it in previous years, Greece is below the OECD average and is far from 67 years. The average retirement age for women is up to 60 years (59.7 years), and for men 63.2 years. While the OECD average is 63.1 years for women and 64.4 years for men. In Denmark, the estimated retirement age is 74, and in Colombia, the retirement age for those starting work in 2022 will be 57 for women and 62 for men.

As noted, replacement rate Greece’s youth workforce will be among the highest among OECD countries. Specifically, for the average worker entering the labor market in 2022 and completing the full insurance period, the net pension will correspond to 80.8% of his net salary, compared to 50.7% for men and 50.1% for women on average across countries OECD.

The replacement rate indicator characterizing the well-being of pensioners shows the ratio of pension to salary in the last year of work. As experts note, an insurance pension should solve three problems:

  1. compensate for earnings lost due to termination of work after retirement;
  2. ensure a balance between the incomes of non-working pensioners and working citizens;
  3. protect against poverty in old age.

The replacement rate makes it possible to most adequately assess how pensions cope with the first two functions. When predicting the dynamics of the indicator, experts use four scenarios: for workers who received the minimum wage, an average salary, a median salary (50% of workers receive less and 50% above it) and, finally, a high salary (twice the average).

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