The Social Protection Committee
Promoting longer working lives through pension
reforms
Second part
Early Exits from the labour market
February 2008
1
Introduction ............................................................................................................................... 3
1.
The key role of reducing early exits from the labour market .......................................... 4
1.1.
The main driver of population ageing is the continuous increase of life
expectancy at higher ages...................................................................................... 4
1.2.
A strong decline of employment rates from 55..................................................... 6
1.3.
Most transitions from work into retirement are not direct .................................... 8
1.4.
Some risks of divergence .................................................................................... 11
2.
Design and recent reforms of early paths of exit from labour market.......................... 13
2.1.
Current coverage of early exit benefits ............................................................... 13
2.2.
Early retirement schemes and special retirement rules for certain categories .... 14
2.3.
Unemployment benefits, special rules for older workers.................................... 20
2.4.
Invalidity benefits: passive versus active benefits .............................................. 28
2.5.
Survivors' benefits: Compatibility of benefit receipt with employment ............. 39
2.6.
Private pensions................................................................................................... 44
2.7.
Taxation and social contributions ....................................................................... 47
2.8.
Links between benefits and possibilities to combine with earnings from work . 50
3.
Trends at play and planned reforms............................................................................... 52
3.1.
Recent reforms aim at reducing the current high level of take up of early exit
benefits ................................................................................................................ 52
3.2.
Expected evolutions ............................................................................................ 54
3.2.1.
Recent trends of take-up................................................................................... 54
3.2.2.
Expected trends of take-up............................................................................... 55
3.2.3.
Employment behaviour (transition from work to inactivity and pension) ....... 58
3.2.4.
Income situation of older people...................................................................... 61
3.2.5.
Projected spending on these benefits ............................................................... 61
Conclusion ............................................................................................................................... 62
Annex – Data used .................................................................................................................. 64
2
INTRODUCTION
The 2006 Synthesis Report on Adequate and Sustainable pensions highlighted that nearly all
Member States are putting in place reforms of their Social Protection systems in order to
promote longer working lives. Indeed, in all Member States increasing the effective
retirement age is considered a key channel to adapting pension systems to ageing populations.
The 2006 Synthesis Report identified policies to restrict paths of early exit from the labour
market as an area for further analysis and exchanges of good practices between Member
States.
As reflected in the 2006 Synthesis Report, most Member States review pension provisions in
order to delay the effective retirement age and, in particular, schemes that allow early exit
from the labour market. This can be done through making access to those schemes more
restrictive, modifying incentives to retire later, or providing more support for older workers
re-entering the labour market. The importance of reducing early exit from the labour market
was also stated in the Joint EMCO-SPC Opinion on Active Ageing from May 2007. Sharing
knowledge on issues such as eligibility conditions, design of incentives or ability of social
protection and the labour market to provide appropriate employment possibilities for older
people can help in this goal.
This SPC horizontal study focuses on paths of early exit from labour markets. It puts the
emphasis on the role of the design of various social protection schemes that enable early
withdrawal from the labour market in promoting longer working lives: early retirement
schemes, unemployment schemes, disability schemes or survivors' or private pension schemes
(notably for those Member States who have traditionally had a more mixed approach to
retirement provision).
The objective is to identify good practices in the adaptation of those schemes to give older
workers more opportunities to prolong their working lives. It reviews recent adaptations of
such schemes. Statutory pension systems are not covered in the current study as they are
actually dealt with in the first part of this horizontal SPC study in early 2007, which focused
on providing more flexibility in retirement age within statutory pension schemes. This second
horizontal study was timed to benefit from the results of the 2006 Labour Force Survey
module on transitions from work into retirement.
Other factors also have to be considered while aiming at prolonging working lives: the
availability of work at older ages; employer's attitudes towards older workers; the effect of
taxation – notably financial incentives for employees and employers; the extent to which
flexibility is allowed in combining various benefits with earned income; and, more generally,
the reform of early paths from the labour market. The latter would include labour market
opportunities, health status and how security of income and flexibility in access to labour
market can be balanced.
This report consists of three sections.
•
Section 1 provides an overview of recent developments of employment rate of older
workers and transitions from work to retirement.
•
Section 2 focuses on various modalities of early exits from the labour market and
related recent steps in reforms.
•
Section 3 focuses on trends at play in coverage of these schemes, on expected
developments and approaches developed in Member States for next steps in reforms of
these schemes.
3
1.
THE KEY ROLE OF REDUCING EARLY EXITS FROM THE LABOUR MARKET
The first part of this SPC study emphasised that, during the last decade, the employment rate
of older workers has increased, reversing a long declining trend. The employment rate of
older workers (55-64 age brackets) has increased from 36% in 1995 to 45% in 2006 for EU15,
while the increase for EU25 went from 37% in 2000 to 44% in 2006.
But in spite of these recent increases, there is still a significant gap to span before reaching the
European target of 50% employment among older workers. Indeed, in order to ensure both
future adequacy and sustainability of pension systems, the employment rate of older workers
will need to increase beyond the objective of 50%. For instance, the latest projections from
the AWG suggest that the employment rate of older workers will reach 50% by 2013 and 60%
by 2050. They also expect an increase in public pension expenditures by 2.2 percentage points
of GDP by 2050 in EU25.
As highlighted in the 2006 Synthesis report, the pension challenge remains essentially in
closing the gap between currently low employment rates of older people (they remain lower
than levels of some decades ago, in spite of parallel improvements in health status) and the
ongoing trend of increase in life expectancy at 60.
This section highlights focuses firstly on the key role of the projected increase in life
expectancy, in particular at 60 or 65 (close to the current effective retirement age in EU) as
driving demographic pressure on pension systems. It then highlights that employment rates in
EU decline rapidly from age 55 to age 64 and that most transitions from work to retirement
are actually not direct. Furthermore, while a general improvement of the employment
situation of 55-64 has occurred in recent years, there are also some signs of divergence
between Member States, genders and qualifications which could weaken future adequacy of
pensions.
1.1.
The main driver of population ageing is the continuous increase of life
expectancy at higher ages
The latest demographic projections from Eurostat (2004 demographic projections) provide a
clear view of the projected demographic pressure on pension systems. The demographic
pressure on pension systems as measured by demographic dependency ratios (for instance
population aged 65+ as a share of population aged 15-64) is expected from Eurostat to nearly
double from 2004 to 2050 (from 25% to 53%)in the baseline scenario. Eurostat also
elaborated some alternative scenarii to assess the sensitivity of this change in dependency
ratio (see box 1).
4
Graph 1 - Evolution of dependency ratio
Dependancy ratio 65+ / 15-64
60%
40%
20%
0%
2004
2050 no life expectancy gain
2050 fertility 2,1
2050 central
Source: estimates from Eurostat 2004 projections. Note – see box 1.
It appears that the projected increase in life expectancy, in particular at 60 or 65 is a main
driver of the demographic pressure on pension systems (at EU level more significant than the
current low levels of fertility). In this context it is essential to accelerate the increase
employment rates among 55-59 and, in the longer term, to increase employment rates among
60-64 in order to ensure the future adequacy and sustainability of pension systems.
Box 1 - The role of various demographic components in demographic pressures - rough
estimates from 2004 Eurostat demographic projections
The demographic pressure on pension systems arises essentially from past demographic trends and from the
continuous expected increase in life expectancy, though other factors are also at play, such as relatively low
projected fertility levels.
Even if fertility rates were very high in future decades, the dependency ratio would still nearly double in the
coming decades (about 46% in 2050, compared to 25% in 2004). This is estimated (see below) on the
assumption of a fertility rate of 2.1, which is high compared to current projections. Indeed the latest Eurostat
projection use a level of 1.9 instead of 1.6 in the baseline and past trends are clearly showing a strong decline as
the total fertility rate declined from its highest 2.6 in the 60's to around 2 in the mid 70's and 1.5 in the 90's.1
If life expectancy does not increase, the increase in the dependency ratio would be significantly slowed, though
the ratio would still be significantly higher than today (around 44%). It should be noted that most of the
projected gains in life expectancy in the coming decades are expected to arise after 65. From 2004 to 2050, life
expectancy at birth is projected to increase by around 5 years for women and about 6 years for men. In the
meantime, projections see life expectancy at 65 increasing by about 4 years from 2004 to 2050 (4,4 years for
men and 3,9 years for women).
The effects of a high fertility rate would only translate into more favourable developments from 2025-2030
onwards, when new generations reach the age of 20. However, current improvements in life expectancy will of
course impact on demographic ratio from the beginning of the period.
As such most of the projected increase in the dependency ratio arises from current and past demographic
dynamics. Low levels of fertility in recent decades, combined with parallel quick increases in life expectancy
1
See for instance Long-term population projections at national level, Giampaolo LANZIERI, Statistics in focus
3/2006 http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-NK-06-003/EN/KS-NK-06-003-EN.PDF
5
and low migrations levels will by themselves translate into a significant increase in future dependency ratios,
even if future demographic components have strong neutralising impacts (see graph 1).
Evolution of dependency ratio (15-64/ 65+)
Different assumptions in
life expectancy
Base scenario
2004
25%
2050
53%
Base
Different
assumptions in
fertility
Base
Population high
Population young
High fertility
25%
25%
25%
49%
44%
49%
High
Low
Base
High
High
High
Source: Eurostat (2004).
One can estimate the relative role of various key demographic assumptions, on future developments of
dependency ratios, based on the latest demographic projections.
To illustrate the role of gains in life expectancy, one can compare two scenarii only differing by optimistic or
pessimistic assumptions on future life expectancy: population high and population young. The difference is 5%
in 2050, for a difference in life expectancy of around 4 years between two assumptions. As in the base line the
increase of life expectancy is of about 7 years, if one assumes the results to be nearly linear, this means that if
life expectancy remains at the levels observed in 2004 (no expected gains), the dependency ratio would increase
of about 9% points less, that is around 44%.
As an alternative, one can also consider the effects of more favourable fertility rates. The scenario of high
fertility indicates a dependency ratio of 49% in 2050 (4% less), for a fertility rate of 1.9 in the future instead of
1.6 in the baseline. Here again with an assumption of linear changes, a fertility rate of nearly 2.1 in all Member
States would translate into a level of dependency of about 6.5 pp less than in the base line, around 46%.
1.2.
A strong decline of employment rates from 55
The role and impact of reforms of early exits on employment rates of older people is central.
There is a significant decline of employment rates when workers get older and this clearly
accelerates between 55 and 64 (graph below). Reflecting the particular roles that these ages
can play in national pension policies, the share of people being retired increases significantly
(by more than 10 percentage points) at ages 60 and 65.
Graph 2 - Economic activity by age in EU27 (2006)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
50
51
52
53
54
employed (full-time)
unemployed
inactive-other
inactive-retired
55
56
57
58
59
60
61
62
63
64
65
66
67
68
employed (part-time)
inactive- sick, disabled or injured
inactive-looking after family or home
Source: LFS.
6
69
The share of inactive (for sickness or other reasons) increases significantly from the age
bracket 50-54 to the age bracket 55-59 and then remains roughly constant in the age 60-64
before declining slightly from 65.
To achieve the objective of longer working lives it is essential to delay this decline in
employment. Reducing the decline in employment in the 55-59 age bracket can make a huge
contribution to the increase in employment rates of older workers, and it is also a necessary
step to ease and prepare for the increase in employment rates among older workers (60-64 and
65+). For instance, reducing the decline in employment rates in the 55-59 age brackets to the
best levels observed in EU would alone reach the Lisbon target of 50% for those aged 55-64.
Graph 3 – Employment rates in 2006 (age brackets 50-54, 55-59 and 60-64)
90
80
70
60
50
50-54
55-59
60-64
40
30
20
10
uk
fi
se
sk
si
ro
pl
pt
nl
at
mt
hu
lt
lu
lv
cy
it
fr
gr
es
ie
ee
de
cz
dk
bg
be
eu15
eu25
eu27
0
Source: LFS (2006).
In 2006, in EU 27, on average the employment rate of 50-54 was 73 %, 55- 59 was 56 % and
60-64 was 28%. There was a 17 p.p. decline in employment rates from 50-54 to 55-59 and a
more important 28 p.p. decline from 55-59 to 60-64 (graph 3). Employment rates among 5054 are much less dispersed among Member States than for higher ages. They are generally
around 70% with a number of Member States closer to 80% or 85% (with the exception of
MT at 55% and PL 60%).
Differences in employment rates at older ages thus essentially reflect different paces of
decline in employment rates from 50-54 to 55-59 and then 60-64:
•
The declines between 50-54 and 55-59 age brackets show significant differences
between Member States, ranging from very low (less than 10 p.p., like in DK, SE and
LT) to large declines of 20 p.p. or more (like in BE, CZ, FR, IT, LU, HU, AT, PL, SI
and SK).
•
The declines from 55-59 to 60-64 are in general of a higher magnitude, reflecting also
higher take-up of pensions. They range from around between 15 and 20 p.p. (PT, PL,
RO and IE) to around 30 p.p. (BE, BG, EE, MT, SI, FI) or even more than 35 p.p. (CZ,
DK, DE, FR, LT, LU, HU, NL, AT, SK).
The employment gap between age brackets follows an adverse trend: while the gap between
50-54 and 55-59 has been declining slightly in the last decade, the one between 55-59 and 6064 has been slightly increasing (graph 4).
7
Graph 4 – Employment gaps between 50-54 / 55-59 and 55-59 / 60-64 since 1995
35
30
25
20
15
eu27 GAP 50-54 / 55-59
eu15 GAP 50-54 / 55-59
eu27 GAP 55-59 / 60-64
eu15 GAP 55-59 / 60-64
10
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source: LFS.
1.3.
Most transitions from work into retirement are not direct
This section examines trends and transitions from employment to retirement, essentially based
on the 2006 LFS special module on transition from work to retirement. Figures provided here
are preliminary and will be revised when available (in particular they do not cover all
Member States, see annex).
The first part of this SPC study on flexibility in retirement age, highlights that more flexible
paths out of employment into retirement can contribute to the objective of longer working
lives, for example the increase in employment of older workers over the last decade is partly
due to an increase in part-time work (in particular among men).
It also highlights that direct transitions from employment to retirement among workers aged
55-64 represent a slightly increasing trend in EU15, though a decline can be observed
between 2000 and 2006 in EU25. On the other hand, while the frequency of early exits has
declined in the last decade in EU15, it remained roughly constant in recent years for EU25.
Moreover, the share of exits due to lack of employment has also increased in recent years,
highlighting the need to develop better employment opportunities for older workers.
Actually about 10% of active people aged 50+ have reduced or plan to reduce their working
hours in a move to full retirement (graph 5). About 40% of the 50+ population have no plans
in this respect and another 50% plan not to reduce hours before retirement.
8
Graph 5– Reduction of working hours before full retirement by age in EU (2006)
100%
80%
Yes, in a progressive retirement
scheme/part-time pension
Yes, but not in a progressive retirement
scheme/part-time pension
No, but plans to do so within the next 5
years
No, and plans not to do so within the next
5 years/did not do so
No, and does not know about plans for the
next 5 years or plans are not relevant
No answer
60%
40%
20%
0%
50-54
55-59
60-64
65-69
Total
Source: 2006 ad hoc module LFS, see annex.
When workers get older, the share of those who do not plan to retire in a progressive manner
remains nearly constant, at about 50%. Consequently we must examine, not only the
possibilities opened to reduce working hours (especially without taking up a pension covered by the first part of this SPC study), but also the other different paths out of the labour
market.
Only about half of older workers leave their last job or business to take up a pension: about
55% take up directly a pension or an early pension. They also often leave for either
unemployment (13%) or long term sickness or disability (12%). At higher ages, the share of
older workers who leave their last job or business to take up a pension increases regularly,
while the share of those leaving for unemployment decreases sharply, as does long term
sickness or disability to a lesser extent (graph 6).
9
Graph 6– Main labour status just after leaving last job or business in EU by age (2006)
100%
80%
60%
40%
20%
0%
50-54
In retirement or early retirement
55-59
60-64
Unemployed
65-69
Long term sick or disabled
Total
Other and no answer
Note: The variable is based on self assessment. Unemployed may include government training, persons waiting
to start a job, etc. Source: 2006 ad hoc module LFS, see annex.
These proportions are very diverse among Member States, especially among those aged 55-64.
Exits through direct pensions are particularly low in some Member States (notably BE, ES
and CY). The share of exits through unemployment lies at around 15% on average and is
rarely lower than 10% and can exceed 25% (DE, ES, FR, LT, PT, FI and SE). The share of
exits for long term sickness or disability is also generally around 15% (it is lower than 5% in
IT, CY, LV and SI and around or often higher than 25% in EE, ES, IE, HU, LT and FI).
Graph 7 – Main labour status just after leaving last job or business among 55-64 (2006)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
BE BG CZ DK DE EE EL ES FR IE
Retirement or early retirement
IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK UE
Others
Unemployed
Long term sick or disabled
Note: The variable is based on self assessment. Unemployed may include government training, persons waiting
to start a job, etc. Source: 2006 ad hoc module LFS, see annex.
The main reason for retirement or early retirement among 50-69 is having reached statutory
retirement age (about 40%), which clearly increases with age brackets. For about 10% this is
related to difficulties in the labour market (job loss 7% or problems related to job 2%), similar
to reasons linked to health difficulties (own health or disability 12% or care responsibilities
10
2%). About one third declare a main reason linked to favourable financial arrangements to
leave (9%) or a preference to stop working (20%). It is striking that the share of retirement
linked to difficulties in the labour market remains quite constant with age, while difficulties
with own health and disabilities are declining in parallel as well as reasons linked to
favourable financial arrangements to leave.
Graph 8 – Main reason for retirement or early retirement in EU by age (2006)
100%
Other and no answer
Preference to stop working other
than previous codes
80%
Favourable financial arrangements
to leave
60%
Own health or disability
Care responsibilities
40%
Problems related to job
20%
Job lost
0%
50-54
55-59
60-64
65-69
Total
Had reached statutory retirement
age
Source: 2006 ad hoc module LFS, see annex.
1.4.
Some risks of divergence
While labour market outcomes have shown more positive developments in recent years than
in previous decades, there are risks that these improvements have not spread. Improvements
may occur in some Member States and not in others, they can affect men and women
differently and skilled or low skilled labour forces may also see disparate results.
11
Graph 10 – Dispersion of employment rates among Member States
Average standard deviation of employment rates for 55-64 and for 25-54 (1983-2006)
10
9
8
Total 2554
7
EU* 25-54
6
5
Total 5564
4
EU* 55-64
3
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
2
Source: Labour Force Survey. Note: Total for all Member States available, EU* for a group of Member States
where are available all the period long (BE, DK, DE, IE, EL, FR, IT, LU, NL, UK).
Improvements in older people’s employment levels differ greatly between countries. Progress
can be slower in Member States where employment rates of older people are already lower.
The analysis shows that while there is convergence over the last two decades for the
employment rates of the 25-54 population, there is divergence among the 55-64 age bracket
(Graph 10), especially since the mid 90's where, on average, a positive trend is observed.
Graph 11 – Employment rates by gender for 55-64
Source: Labour Force Survey.
While the employment rate of 55-64 has increased by 7 points since 2000 in the EU25, the
increase is 6 points for men and 8 for women (graph 11). The catch-up is slow, and levels
remain very uneven, with 36% for women and 53% for men. In this context, there is a need to
pay particular attention to the situation of women as they approach retirement age and more
generally, it is clear that gender differences in regards to employment can have strong
consequences for pension outcomes (86% for men and 70% for women for employment rates
among 25-54), while this also reflects different eligibility ages in retirement schemes for men
12
and women. In this respect, the gender harmonisation of eligibility rules to pension schemes
would also make an important contribution to the reduction in gender differences in
employment rates of older workers.
Graph 12 – Employment rates of men 55-64 by skill levels (EU25)
Source: Labour Force Survey.
Since 2000 the increase in the employment rate among 55-64 year olds has been relatively
slower for the less qualified within the EU25: it has been 5 points for the less qualified,
compared to 6 or 7 points for medium or highly qualified (graph 12). At the same time the
evolution of employment rates for the less qualified was more favourable for the age bracket
25-54, probably reflecting targeted employment measures.
These uneven employment trends described are raising some concerns, especially with
regards to the future adequacy of pensions, as working longer is central to accruing pension
rights. Thus more effort should be made to target groups with weaker progress, including
people with lower levels of education.
2.
2.1.
DESIGN AND RECENT REFORMS OF EARLY PATHS OF EXIT FROM LABOUR MARKET
Current coverage of early exit benefits
Coverage of various benefits allowing early exit from the labour markets varies significantly
among Member States. Early retirement, unemployment and disability benefits are often used
as paths of early exit from the labour market, in particular among those aged 55-59. The take
up of private pensions and survivors' benefits can also be significant in some Member States.
A strong contribution to the decline in employment rates from 55
Information on the take-up of various early exit paths has been provided by Member States
through SPC questionnaires and the LFS. However, the figures quoted here are generally
taken from domestic sources and so are not completely comparable. Comparing figures across
EU is further complicated as there are often different data sources for a given scheme which
are not necessarily harmonized and these figures cover the main schemes and are thus not
necessarily exhaustive.
According to the SPC questionnaire about 20 % of those aged 55-59 took an early exit path
from the labour market (it ranged between 5 and 40 %). In the age bracket 60-64, the take-up
is not very much more pronounced and is also around 20 % (but more dispersed, ranging
13
between negligible to more than 50 %).
The LFS and SPC questionnaires provide information on the means of early exit:
unemployment benefit, disability benefit and early retirement or other benefits. There is much
variation between Member States on the ratio of early retirement or unemployment schemes
and invalidity schemes. However, the results can be divided into three groups according to the
take-up of early exit schemes as a share of the population aged 55-64:
ƒ
Low take-up (less, than 10%): ES, CZ, CY, DE, PT, IE and LV. In ES and CZ the
main pathways of premature exit from the labour market are unemployment and early
retirement, in IE and LV these are mainly disability schemes.
ƒ
Medium take-up (between 10% and 20%): FR, BG, DK, EE, SI, SK and UK. In all
countries of this list but FR the main route to early exits is through disability schemes.
ƒ
High take-up (more, than 20%): BE, LU, PL, HU, NL, LT, RO, FI and SE. The
majority of those leaving the labour market early do so through disability but in BE,
LU and PL early exits tend to be through unemployment or early retirement schemes.
The ratio of unemployed people to those on specific early retirement or unemployment
benefits also varies widely between Member States, reflecting different choices and the
importance given to dedicated schemes to combat the underemployment of older people. In
some Member States specific unemployment or early retirement benefits' take up levels are
higher (like in BE, CY, EE, FR, PL, RO), in others the levels of unemployment are higher
(BG, DE, DK, ES, FI, PT), and in some other ones they are comparable (LT, NL, SE, SK,
UK).
SPC questionnaires also provided information on numbers of inactive people on survivors and
private pension benefits. However, in this age bracket, take-up of private pensions is generally
negligible (or not available - see section 2.6), while the coverage of survivors' pensions varies
significantly between Member States (although generally focused on women - section 2.5).
2.2.
Early retirement schemes and special retirement rules for certain categories
This section discusses early retirement schemes, other than the ones provided by the statutory
pension scheme (PAYG or NDC, in the form of early retirement option in order to allow
flexibility in the system). The latter possibilities, as pointed out in the introduction, were
analysed in the first part of the SPC study on flexibility in retirement age provision.
Early retirement benefits can be a main reason for early labour market exit. Around 20% of
people aged 55-59 are on early retirement benefits in PL, around 10% in LU and SK, and
between 4 and 6% in BE, DE or RO. In other Member States, the levels of take-up are
generally lower (see tables below). Though the take-up of these benefits generally declines in
the age bracket 60-64, it increases sharply in BE (12%), DK (41%), LU (31%) and PL (42%).
14
Table 2 – Take up of early retirement schemes in EU27
Low
(<3%)
Medium
(Between 3% and
10%)
BE, DE, HU, LU,
RO, SK
High
(≥10%)
DK, ES, FR, LT,
PL
PT, SE
CY, FR, HU, PT,
DE, ES, IE, SK
BE, LU, DK, PL
Take up as a share of population 60-64
RO, SE
Note: These figures are generally taken from administrative sources are not necessarily completely comparable.
Member States for which information is not provided do not have such information available. This table refers to
specific early retirement schemes opened for all categories of the population. Source: National replies to the
SPC questionnaire. Figures generally refer to 2006.
Take up as a share of population 55-59
In 14 Member States, there are specific early retirement schemes open to all categories of
the population. Only in a few Member States are they explicitly made available due to major
economic restructuring (ES, ASFNE scheme in FR, HU). In some cases the schemes were
primarily expected or are still expected to contribute to reducing unemployment levels (BE,
ES, IE, ER2 scheme in LU, PT). They can also be expected to contribute to the flexibility of
working careers and a smoother transition to retirement (BE, RO, FI).
The earliest retirement age can be as low as 50 in the case of BE or FR CAATA scheme. In
IE the limit is set on 55 years in case of PRETA allowances as well as in LU if the person has
38 contributory years. In RO, possibilities for early retirement were recently made available,
for those with long careers (contribution length exceeding the one for full contribution).
Germany has also included people with long insurance records in those eligible for early
retirement schemes.
These early retirement schemes have often been reformed in recent years. Indeed, today it is
widely accepted that there is in fact no trade-off between the employment of younger people
and older people. International comparisons show that, at the macroeconomic level, restricting
the labour supply of older people does not improve the labour market prospects of the young,
but can actually reduce overall employment as it generates an additional cost to social
protection systems.
In DK, following the Parliament Agreement on Future Prosperity, Welfare and Investments in
the Future in 2006, the legislation implementing the agreement was adopted in the course of
2006 and spring 2007. It includes adjustments to the age limits for the early retirement and
public pension schemes and the subsequent indexation of those age limits to life expectancy at
60. The indexation mechanism makes public finances more robust to future increases in life
expectancy.
In most Member States, certain categories of worker can retire earlier, prior to the normal
statutory retirement age and in a few cases receive pension benefits that have not been
actuarially reduced. Only in CZ, are there no special conditions for any labour category. There
can also be specific rules regarding retirement age for civil servants (CY), often linked to
specific negotiation with social partners, although they can be gradually being abolished as in
IE and FI.
Actually the list of jobs and professions offering early retirement options differs greatly
among Member States, also reflecting history of construction of pension systems and cultural
differences. The justification of specific early retirement rules is generally linked to the nature
of the work or to the working environment.
In nearly all Member States, employees working in hazardous working conditions or on
physically demanding jobs such as policemen (retirement age 54 years in BE), members of
the armed forces, miners, fire-fighters and pilots benefit from special early retirement
15
provisions. Besides, other specific categories can be covered by special rules like
fishermen/seamen (FR, FI, PT), embroidering workers (PT), lorry drivers (FR) or in LV
participants of the Chernobyl NPS nuclear clean-up. FI and PL offer a special scheme for
farmers if they give up farming. In some New Member States (HU, EE, LT, LV, PL), there
are also several schemes introduced under the former regime favouring certain occupations
(textile manufacturing workers, heavy industry workers etc) or even ones occupied in artistic
activities (singers, dancers etc).
Member States are tackling reform of early retirement schemes in different ways. Clearly,
general pension scheme changes that modify statutory retirement ages also interfere with
early retirement schemes (for instance the planed increase of retirement age in DE up to 67 in
2029). As the specific eligibility conditions are often part of employment conditions and
negotiated between the management and the labour force, the Social Partners often have an
important role to play in the adaptation of these schemes.
•
A first dimension is to ensure that employers bear all or at least a significant share of
these costs. In DE, early retirement schemes have not been available since 1988. The
cost of early retirement is borne by the employer who, as part of an agreement, pays
salary and contributions to employees who have exited the labour market prematurely
until they reach the normal retirement age. In HU, since 1997, the employer also has
to pay the early retirement pension until statutory retirement age (though this is not
true of advanced pensions). Similarly, the employer has to make special contributions
for employees belonging to certain labour categories from which compensation will be
paid later on (BG, SI).
•
Secondly incentives can be offered to compensate for particularly demanding or
hazardous jobs through raised salaries, instead of passing all of the obligation for
compensation on to the State in the form of an earlier or more favourable retirement
(as occurs in a few MSs), for instance in EE or HU, where it is the State's obligation to
compensate for unfavourable working conditions or specially demanding jobs in
private sectors through the pension system). An interesting approach has been
developed within the new defined-contribution scheme in IT: the remaining life
expectancy that is used to convert accumulated contributions into a pension benefit is
reduced by one year for each period of six years of employment in hard working
conditions. This allows the worker to choose between retiring early or earning a higher
pension.
•
In some other Member States, eligibility rules are tightened for instance by increasing
eligibility age like in FI where the minimum eligibility age for early retirement has
been raised to 62 or 63. Several countries (FR, IE, LT, PL) are also in a process of
reducing the importance of special schemes by either reducing the levels of benefits
provided or closing schemes.
•
For all schemes, one option is to ameliorate working conditions so that the nature of
the job is less harmful to workers' health. A more flexible view should can be
developed, promoting retraining and a change of profession when the previous one
becomes too physically challenging.
Table 3 – Design of early retirement schemes
MS
BE
Design of early retirement schemes
There are two different schemes for the employed of the private sector enabling certain redundant workers to
combine unemployment benefits with a complementary early retirement allowance. In conventional early
retirement the amount of the allowance has at least to be equal to half of the difference between the net
reference earnings and the unemployment benefit. The age of access will be increased since 2008. In the
16
MS
BG
CZ
DK
DE
EE
EL
Design of early retirement schemes
system of credit-time, of breaks in career and reduction of part time benefits, aims at reconciling employment
and the quality of family life. It enables to stop work for 1-5 years. It also facilitates at least 50-year-old
workers to reduce their working time to ½ or 1/5 until retirement.
Scheme for public servants enables taking 6 years interruption working part-time. Workers receive 50% of
their wage and an allocation of EUR 130.20. It is also possible to choose reduce work to 80%. An agent can
also take 6 years of complete interruption, while no wages are paid, only an allowance of EUR 260.39.
Do not exist.
Do not exist since 1993.
Voluntary early retirement pay scheme is retirement benefits, which are available to members of an
unemployment fund who have paid early retirement contributions. It is allowing withdrawing from the labour
market gradually before reaching normal pension age (65 years). The participant must be at least age 60 to
start the early retirement period. However, the early retirement age exceeds 60 for participants born on 1
January 1959 or later.
Flexi-benefits are retirement benefits, available to persons employed in flexi-jobs who participate in the
scheme and wish to retire from the labour market before normal pension age. The scheme is administered by
the municipalities. As a general rule participants achieve the right to flexi-benefits after having paid
contributions for 30 years.
Following the Parliament Agreement on Future Prosperity, Welfare and Investments in the Future in 2006,
the legislation implementing the agreement – the welfare reform - was adopted in the course of 2006 and
spring 2007. It includes adjustments of the age limits for the early retirement and public pension schemes and
the subsequent indexation of those age limits to the life expectancy at 60. The indexation mechanism makes
public finances more robust to future increases in life expectancy, which are not easy to predict.
Since 1988 there has not been any 'genuine' state-subsidised early retirement system - the cost of early
retirement (Vorruhestandsgeld) is, as a rule, borne by the employer. Employees who, as part of an agreement
with their employer, exit the labour market prior to reaching the regular retirement age are not pensioners: as
long as they do not draw a pension, they receive a pay like other employees and contributions are paid into a
pension insurance fund. The same applies to employees who take advantage of the opportunity to make a
gradual transition to retirement under the provisions of the Partial Retirement Law (Altersteilzeitgesetz).
During the transition employees are paid their reduced salary plus some mandatory additional benefits for
social policy considerations.
Do not exist.
Mothers of minors (up until the age of 18, or 24 in the case they study towards a higher degree). In particular,
those who have been insured until 31/12/1992 can retire and receive a full pension at the age of 55 or a
reduced pension at the age of 50, provided that they have worked for at least 5,500 working days. Mothers of
minors who have entered the social security system, for the first time, from 1/1/1993 can retire to a full
pension after they have completed a 6,000 days’ insurance record and their 55th year of age, while, for a
reduced old-age pension they need the same insurance record and have reached 50. In this latter case, their
pension benefit is reduced by 1/267 for each month by which their age is falling short of their 55th year.
Mothers of at least 3 children, who have an insurance record of at least 6,000 days, enjoy a reduced age
requirement: the generally required age (of 65) for an old age pension is reduced by 3 years for each child,
for a maximum of 5 children (that is, it can be reduced down to the age of 50).
Mothers of children with an invalidity percentage of at least 67% can retire after 7,500 days of insurance,
without any age requirement.
Insured persons (men or women) with a spouse with an invalidity percentage of no less than 80% can retire
to a full old-age pension after 7,500 insurance days, independently of their age, provided that there has been a
minimum of 10 years of marriage.
Handicapped persons can retire to an invalidity pension, provided that they have an invalidity percentage of
at least 50% (see also 3.4.1).
Individuals, employed in occupations that are included in the Arduous and Insalubrious Regime, can retire to
an old-age pension at an age lower than that generally required. This is because it is recognized that these
persons suffer from an earlier weakening of their body due to the nature of their employment. (see also 3.2.1)
ES
In case of restructuring of companies resulting in collective dismissals a series of economic compensations
17
MS
FR
IE
IT
CY
LV
LT
LU
HU
Design of early retirement schemes
are authorized, among which the ones that are affecting the Social Security benefits. Certain conditions have
to be met by the employer to benefit from the scheme. The company will credit involved workers the basic
compensations, based on the years of service. In some cases, entire or part of the compensation is paid by the
Pay Guarantee Fund. There is another similar scheme existing that also takes into account the age of the
employee
For some specific group of people working in a hazardous work conditions (coal miners, seamen), early
retirement benefits don’t have actuarial reduction in the amount of the pension.
There are several public early retirement mechanisms open, under certain conditions:
- Special allocation of the national fund of employment (ASFNE) in the companies in sever
economic difficulty (used for the employees 57+ being subject to a dismissal and meeting
conditions of seniority in the company (one year) and of duration of affiliation to Social Security
(at least 10 years). The allocation amounts to 65% of previous wages limited by a ceiling. It is paid
up to the age of 60 or beyond, until obtaining the duration of insurance required for a full rate
pension;
- Anticipated activity stopping of certain employed persons (CATS) intended for certain disabled
employees or subject to particularly hazardous work conditions (the State takes charge of a part of
the allocation either when the employees concerned either worked at night or on the line for 15
years, or are considered disabled and have at least 10 years of affiliation to social security. The
allocation can be paid from the age of 55 but the participation of the state comes in only as from
57. The base of the benefit taken in charge by the State cannot exceed 65% of previous reference
wages within a ceiling);
- Anticipated Stopping of activity of the workers of "asbestos" (CAATA) (for employees affected of a
disease related to asbestos and former employees of the establishments manufacturing of asbestos
or of establishments of naval construction and repair or of certain harbors. The benefit can be paid
from age 50, its amount is 65% of previous reference wages within a ceiling).
Other public early retirement mechanisms were closed in recent years.
There is one social assistance scheme (introduced in 1990) providing early retirement: the Pre-Retirement
Allowance (PRETA) that allows a person, aged 55 or over, to retire and receive a weekly allowance subject
to certain conditions. It is a means-tested benefit reducing the number of the unemployed. A decision has
been taken by the Government and legislation has been enacted to phase out this scheme in line with labour
market activation measures for older workers and so no new applications are being accepted after 4th July
2007.
Since 1 April 2004, new entrants to the civil service will not have the option of retiring with a full pension
until age 65.
The only early retirement scheme still in force was established in 1981 for workers of the publishing field.
For the workers of the publishing sector It is possible to retire without age limits provided that he has been
contributing for at least 32 years.
Do not exist.
Until July 2008 it is possible to apply for early pension 2 years before reaching the age stipulated by law with
an insurance period longer than 30 years. Amount of the benefit until person reaches the statutory retirement
age is 80 % from the granted pension. The scheme exists from January 1996.
Do not exist.
A special scheme (pre-retirement) ER1 allows to anticipate retirement if specific conditions are fulfilled. It is
subject to taxation, subject to social security contributions, every beneficiary is entitled to an early old age
pension at the age of 60, provided he/she can prove at least 480 months of contributory and credited periods.
Beneficiaries retiring after March 2002, can retire aged 55+ and with at least 38 years of insurance periods.
Scheme ER2 is also subject to taxation and social security contributions, a prevention instrument against
unemployment if there is a threat of dismissal in cases of company reorganisation or technological transfers
and other similar cases. Age of entry into the scheme cannot is 57+ and cannot occur less than 3 years prior
to becoming eligible for either an old-age pension or an early old-age pension at the age of 60.
As a mean against growing unemployment following the regime change, in early 1990s opportunity for early
retirement due to labour market reasons were designed to promote employment and to ease the emerging
labour market and social tension. At the beginning the scheme was financed by the Employment Fund, since
1997 the employer pays the former worker’s pension until he or she reaches the age entitling him to an early
retirement pension (maximum 5 years). This type of benefit is gradually losing significance.
Advanced pension and advanced pension with reduced sum: Women may retire at the age of 57 and men at
the age of 60 with reduced pensions if they have employment periods of at least 33 years or with full
pensions if they have at least 38; Early pension due to hazardous working conditions: physical workers under
18
MS
MT
NL
AT
PL
PT
RO
Design of early retirement schemes
hard working conditions may retire at an earlier age, in proportion to the number of years spent on this type
of job.
There are some other, but not significant early retirement options: in some occupations, such as miners,
certain artists, members of armed forces may retire earlier by specific rules. The above mentioned early
retirement options advanced pension and advanced pension with reduced sum are the most common ways for
early retirement.
For all categories of the working population, the Pensions Reform provides an early retirement opt-out
clause. This opt-out clause provides that a person who has attained the age of sixty one (61) years, but has
not yet attained the applicable pension age, may retire after attaining sixty one (61) years of age on the
condition that such person has accumulated since his/her 18th birthday, a total of:
• 2,080 paid or credited contributions if born on or after the 1st January 1962; or
• 1,820 paid or credited contributions in the case of a person born during calendar years 1952 to 1961.
In the budget of 2008 a measure was announced whereby a person reaching pension age will be entitled to
receive his/her social security pension irrespective of whether he/she has retired from a gainful occupation
and irrespective of the income from such an occupation.
There are different schemes of early retirement, financed as a pay as you go-scheme (the so called ‘VUTregelingen’), or be capital based. There are different types of pension related to early exits: early old age
pension (‘vroegpensioen’) (intended to provide income as long as the statutory pension age is not –yetreached; the amount of the early old age pension is the same as the old age pension after reaching the
required age would be); prepension (provides income when the age for the statutory pension scheme is not
yet reached); temporary old age pension (provides an additional income, when the age for the statutory
pension scheme is not yet reached and the early old age pension is considered insufficient). Agreements on
availability of schemes are normally made by social partners. Since the mid 1990’s VUT-schemes are being
gradually replaced by prepension schemes.
Do not exist.
People born before 1st January 1949 were entitled to early retirement if aged at least 55 (women) or 60 (men)
and with 20 or 25 years of insurance coverage respectively, including at least 15 years of employment in
special conditions or of a special nature. For people born after 1st January 1949, early retirement is possible
for those who meet the above-mentioned criteria before the end of 2007 and have not joined any Open
Pension Fund (OFE). More over those working in unhealthy conditions or performing a specified type of
work (official list) may retire 5 years early (e.g. journalist, glass workers, rail workers), 10 years early
(miners, persons working with lead, cadmium or asbestos, steel workers, pilots, divers) or 15 years early
(wind instrument musicians).
People born after 01.01.1949 have fewer provisions for early retirement.
Early retirement rules presented above will be in force till the end of 2007 with the exception of miners’
pension. The right to early retirement does not exist in the reformed pension system although bridging
pensions constitute a certain analogy for people who were born before January 1969.
From 1st January 2008, the new system will stop most of the early retirement entitlements. Only miners will
keep the possibility of earlier retirement. Additionally, this occupational group will retain old privilege rules
for receiving and calculating pensions. After 2007 it is planned that both parts of the old-age pension from
FDC and bridging pensions will be calculated in the new system’s rules.
There are some possibilities for farmers for earlier retirement. There is ‘structural pension’ financed from
structural funds that provides benefits to farmers up to 5 years prior to retirement age. In the case of the
armed forces, there is a possibility to retire after 15 years of a duty, without age limit. The target level of
pension after 15 years is 40% of the last wage paid. For each additional year, it increases by 2,6 per cent of
wage (this can be increased for selected years of specific duty – i.e. working with explosives), with the cap of
75% or 80% if the retiree has a disability.
There is an early retirement scheme for long term unemployed different from statutory pension schemes,
introduced in January 2007. There are two possibilities to retire earlier: at 57 years old (when unemployment
occurred, individual must have been at least 52 and 22 years with earnings). There is a penalty of 0.5% for
each month of earlier exit. Whenever there is an agreement between employee and its employer to get
unemployed, there is an additional penalty of 9% until 65 years old). At 62 years (penalty, unless there is an
agreement for unemployment and the individual must have been 57 years old when unemployment occurred).
Among the newly introduced elements of parametric reform lies the insurance of a certain flexibility
concerning retirement by introducing new possibilities of early retirement, which can contribute efficiently to
regulating the labour market and to personal option. Early retirement pension is offered to the insured that
have exceeded their full contribution periods by at least 10 years thus being allowed to pension maximum 5
years before they reach the standard pension age. Partial early retirement pension can be taken by the
19
MS
Design of early retirement schemes
insured that have completed the full contribution periods, and those who have exceeded the full contribution
period by up to 10 years, may claim the partial anticipated pension with a standard pension age reduction by
maximum 5 years.
Early retirement is offered to insured persons, who have exceeded full contribution period (40 pensionable
SI
years (M) and 38 pensionable years (W)), thus being allowed to a pension at the age of 58. That means 5 or 3
years before they reach full retirement age (63 years of age (M) and 61 years of age (W)), which guarantees
the entitled person to have their pension determined solely on the basis of the pension period. An insured
worker, who has completed full contribution period (40 pensionable years (M) and 38 pensionable years
(W)) and who has attained 58 years of age, may claim partial pension.
A possibility of early retirement is set in Social Insurance Act and this provision is related for all categories
SK
of the working population (except for soldiers, policemen, etc.). A reduced pension (early pension) is
awarded to an insured person with at least 10 years of pension insurance. The early pension must be equal to
at least 1.2 times the adult subsistence level (SKK 6 156 in the July 2007 – June 2008 period). The early
pension is calculated the same way as the regular old-age pension, with the current pension value being
decreased by 0,5 % for each 30-day period before retirement age that the pension is awarded.
Following the 2005 pension reform, where several early retirement options were abolished or reduced, it is
FI
possible in the statutory earnings-related pension scheme to retire on the old-age pension flexibly between
the ages of 63 and 68. In the public sector occupational lower retirement ages were common earlier. These
have been gradually abolished, but today there are still people who are within the older schemes and have
retirement ages below 63.
In addition a person who has met the entitlement criteria for pension assistance for long-term unemployment
can receive the old-age pension without reduction for early retirement already at the age of 62 from both the
national and the earnings-related pension scheme. There are also special rules for the seamen’s pensions.
Do not exist.
SE
Do not exist.
UK
Source: National replies to the SPC questionnaire.
2.3.
Unemployment benefits, special rules for older workers
The section analysis unemployment schemes that have specific rules for the elderly and
sometimes enabling premature exit from the labour market. In addition activation measures
are discussed that are targeted to the older unemployed within either normal unemployment
scheme or in countries, where available – specific unemployment scheme for the elderly.
Unemployment benefits are a key reason for early labour market exit in some Member States.
Around 10% of people aged 55-59 are on unemployment benefits in BE and FR and between
4 and 6% in CY, EE, CZ, LT and MT. In other Member States, the levels of take-up are
generally lower (see table 4 below). The take-up of these benefits generally declines in the
age bracket 60-64, though it reaches 15% in FI.
Table 4 – Take up of specific unemployment schemes for older workers in EU27
Take-up of specific unemployment schemes 55-59
(share of population)
Unemployment 55-59 as a share of
population (2006)
EE, IT, RO, AT, IE, UK, BE, EL,
<2,5%
HU, SI, CY
2,5-5%
NL, FR, SE, ES, CZ, BG, PL, PT
>5%
DK, FI, LT, LV, SK, DE
NA
LU, MT
Unemployment 60-64 as a share of
population (2006)
HU, RO, SI, AT, FR, BE, CZ, IT,
<1%
IE
low (< 3%)
medium (3-6%)
high (>6%)
UK
EE
BE, CY
SE
CZ
FR
SK
LT
LU
MT
Take-up of specific unemployment schemes 60-64
(share of population)
low (< 5%)
medium (5-15%)
high (>15%)
CZ
FR
BE
20
DK, EL, NL, PL, UK, BG, CY,
EE, LT, FI
1-1,5%
BG, LT, PL, UK
CY, NL
FI
>1,5%
SK, PT, ES, LV, SE, DE
SE, SK
NA
LU, MT
LU
Note: These figures are generally taken from administrative sources and are not necessarily completely
comparable. Member States for which information is not provided do not have such information available. In
DE a special scheme for 58+ unemployed individuals could make up an estimated 5 % of the population aged
55-64. However, this scheme is about to phase out as of 2008. Source: National replies to the SPC
questionnaire. Figures generally refer to 2006.
The table also shows that in a number of countries, especially for older cohorts rather specific
unemployment schemes are opened, that do not count in the general unemployment level. As
the normal unemployment rate for the 60-64 age group is 0.7%, the specific schemes shows a
much larger membership of over 15%.
In most Member States there are special, more favourable rules for older unemployed
workers. Eligibility conditions can differ in various ways:
•
Benefits can be higher or can be received during longer periods than for younger
unemployed (CZ, EL, FR, IT, LT, AT, PL, SI, FI). In some cases, specific benefits are
paid after the expiration of standard unemployment benefits (BE).
•
Conditions regarding availability for work and job searching are often relaxed for the
unemployed over the age of 55 but tend to be available up to the statutory retirement
age. (BE, DE prior to 2008, FR and UK).
These conditions tend to transform unemployment benefits for older people into early
retirement pensions. In some countries (e.g. FI), retirement pensions may actually be awarded
on the grounds of unemployment.
In a number of Member States, there are hardly any differences between unemployment
eligibility rules for older workers and those of other categories of population (DK since 2007,
EE, ES, IE, LV, MT, NL, PT, RO, SK, FI and SE). Treating dismissed older workers as if
they had hardly any chance of finding another job diminishes the labour market participation
of older workers: dismissed older workers have lower incentives to look for work (lower
labour supply) and employers are encouraged to make older workers redundant (lower labour
demand).
On balance, older unemployed workers can indeed find it more difficult to get another job
than younger job seekers, which certainly justifies maintaining a good social safety net, but
this should only be relied upon once determined labour market integration efforts have failed.
Recent shifts in policy orientations can be observed, particularly placing the emphasis on
activation measures:
•
In some Member States, these specific rules are progressively phased out (DK, DE,
FI) and in the future older workers will face the same eligibility conditions as the rest
of the active population. Minimum age limits for eligibility for specific rules are also
raised (BG).
•
A number of countries consider it particularly urgent to help unemployed older
workers back into the labour market. Germany has developed initiatives since 2002
(expanded until the end of 2010) aiming to improving employment opportunities for
older workers (Initiative 50plus): the return to work is encouraged by offering a
compensation allowance to unemployed people aged 50 or more who accept a lowpaid job; wage cost subsidies are offered for employing older unemployed people;
assistance is provided for training workers aged 45 and above; and a new arrangement
21
for fixed-term employment contracts for employees aged above 52 has been
introduced. These initiatives also include reimbursement to companies for the
additional expenses they have incurred in providing job opportunities for up to 30,000
long-term unemployed people aged 58 years and older for a period of up to three
years. In EE, labour market training and the adaptation of premises and equipment are
provided for the older workforce and pensioners who want to continue working or
seeking work. In LV, measures were introduced in 2006 to improve skills. In LT, HU
and SE, some measures were taken to support employers who employ beneficiaries of
some type of benefits. The UK introduced a voluntary ‘New Deal 50 plus’ scheme in
2000 offering a comprehensive package of job search help and extra financial help for
up to one year for people over the age of 50 who had been claiming benefits for over
six months. Recent legislation aims at combating age discrimination.
Table 5 – Design of unemployment schemes for older workers
MS
BE
BG
CZ
DK
DE
Nature of unemployment benefits for older people
"Seniority complement" is available to those over 50
with 20 years employment history and who have been
unemployed for at least 1 year.
The benefit varies
according to marital status and age.
Some elderly unemployed people are exempt from
registration as job seekers and no longer have to be
available for work. Those between 50 and 57 years with
40 years of contributions or with 38 years of
contributions and at least one year of unemployment in 2
previous years as well as the over 58s are exempt.
Since 1.01.2007 older long-term unemployed people
have a new form of unemployment benefit providing
they meet certain criteria and are registered at the
territorial office of the Employment agency. The criteria
relate to their age: 60, 5 years for men and 57.5 years for
women (2 years earlier than the standard age for men and
1.5 years earlier than the standard age for women).
They must also have a low record of contributions, not
been granted a pension of any kind and not exercise
economic activity that qualifies for compulsory insurance
according to the Social Insurance Code. The cash benefit
is set at the minimum rate determined for the calendar
year and for 2007 it is 90 BGN.
Job seekers under the age of 50 receive unemployment
benefits for 6 months. The payment duration is extended
for those over 50 : job seekers aged 50-55 can receive
unemployment benefits for up to 9 months and job
seekers older than 55 year can receive unemployment
benefits for 12 months.
Activation measures
The unemployed over 50 who resume work as an
employee or as self-employed receive a complementary
benefit to their income (responsibility of the National
Employment Office).
Activa 45 + - For any job creation of a long-term
unemployed person over 45, employers benefit from a
temporary reduction of employers' Social Security
contributions.
National program "Assistance for retirement" - the main
objective of the program is to ensure employment and
help for retirement to unemployed people that lack the
points needed for state pensions.
For those over 50 employment offices provides
“Individual action plan (IAP)” aimed at increasing
opportunities for older unemployed people to find work.
Other possibilities include regional professional requalifications and ESF´s projects.
In the course of the active employment policy
implementation the Labour Offices focus on high
unemployment risk groups which includes people over
50. The number of job applicants over 50 integrated in
retraining has increased considerably in recent years
currently running at 16% out of all those on retraining
courses.
Since 01 January 2007 there are no longer any specific rules for unemployed older workers, neither are there any
specific access to active employment measures.
Entitlement to unemployment benefit generally requires Germany has a number of large-scale labour market
that, among other things, the applicant is willing to accept initiatives aimed at improving employment opportunities
any suitable work under normal labour market conditions for older workers (Initiative 50plus). Special labour
and is taking advantage of all opportunities to work.
market programmes introduced in late 2002 and running
until 31 December 2005 - assistance to ongoing training
22
MS
EE
EL
Nature of unemployment benefits for older people
However the Social Code provides unemployed
individuals aged 58 or older the option to draw unemployment benefit without declaring their willingness to
take up employment. In return, the applicant must commit
themselves to apply for old-age pension at the earliest
possible date. This provision, however, applies only to
unemployment benefit entitlements that arise prior to 1
January 2008
Activation measures
for workers aged 45 and above, wage safeguards for
workers aged 50 and above, integration surplus for older
workers aged 50 and over. These projects have been
extended until the end of 2010, 2009 (integration
surplus), respectively.
The new arrangement for fixed-term employment
contracts for employees aged 52 and older helps improve
older job-seekers' chances to find employment. Initiative
50plus further supplements these programmes by other
People aged 55 and over, when employed subject to social labour market measures: For example, companies are
security for at least three years before becoming being reimbursed for the additional expenses they have
unemployed, are entitled to unemployment insurance incurred in providing job opportunities for up to 30,000
long-term unemployed persons aged 58 years and older
benefit for a period of 18 months.
for a period of up to three years. Within the “Initiative
New Quality of Work” bodies are being set up aiming at
modern and adequate labour conditions as well as
developing and promoting health, and working capacity
of the employed. The federal programme Perspective
50plus - Employment Pacts for Older Workers in the
Regions (also part of the Initiative) targets long-term
unemployed persons aged 50 years and older. By means
of this programme it has been possible to activate more
than 70,000 older job-seekers and integrate nearly 16,000
into the labour market between late 2005 and the end of
June 2007.
The special programme “Continuing Training for LowSkill Workers and Older Employees in Firms” provides
start-up financing for continuing training - particularly in
small and medium-sized enterprises.
There are no special measures for elderly unemployed's people as regards unemployment benefits.
Active labour market measures are open to all those registered unemployed. Starting in 2007 measures such as career
counselling, labour market training and adaptation of premises and equipment will be provided for the older
workforce and pensioners who want to continue working or seeking work. Measures will be provided through the
employment program for 2007-2008 under the EU program period 2007-2013.
The labour market services and benefits act defines labour market risk groups who will receive active labour market
services using the case management method. Individual action plans underly the approach to activation and benefits.
The older workforce is considered as one of the labour market risk groups. This means that individual action plan will
be developed quickly and no later than 5 weeks after registering as unemployed. One of the main obstacle and also
challenges before implementing active measures has been the need for medical help for a number of unemployed.
Since 1 January 2007 all registered unemployed are also covered with medical insurance.
There are special arrangements for older unemployed Since 2004, active policies have been given more
individuals, regarding a longer subsidization period due emphasis, aiming at improving older people’s dexterities
to unemployment as well as favorable prerequisites for and boosting their self-employment.
entitlement.
Active policies (e.g. flexible pension schemes, life-long
Long term unemployed older than 55 years of age, may, learning e.t.c.) began in 2004 to enable the inclusion of
after applying for it at IKA-ETAM, be entitled to older people in the labour market.
allowances in kind by the Health Insurance Branch, An individual action plan is drafted for each unemployed
provided they have paid, at any time, contributions to person. The New Self Employed jobless individuals’
that branch for at least 3,000 wages.
aged 18-64 Subsidy Programme is designed for
Besides, long term unemployed, older than 55, who have unemployed aged 18-64 years, who set up their own
the required insurance record are also entitled to benefits small enterprise.
in kind by IKA-ETAM’s health branch.
For elder individuals in particular, a Business Subsidy
Jobless individuals who are older than 55 years of age Programme is implemented for the employment of 1,500
and have completed the 2 years of insurance and who unemployed (registered with OAED for at least 2
have stopped renewing their unemployment card every months) who are close to their old-age retirement and do
month, may be entitled for health insurance with the not have the required age and social insurance
prerequisite of having a 1 month, instead of 12 , period contributions to be eligible for an old-age pension. The
of registration with OAED.
subsidy is increases for those older than 50 years of age.
23
MS
ES
Nature of unemployment benefits for older people
For people who finish the unemployment contributive
benefits and are older than 52, there is a special situation
called “Subsidio de desempleo para mayores de 52 años”
with fixed amount benefits until retirement. In this
situation contributions are paid in order not to lose
benefit retirement rights.
FR
In the general unemployment insurance scheme, 50-yearold employees with more than 27 months of employed
activity during the three years before the end of their last
employment can claim benefits for 36 months.
Employees over 50 can also combine unemployment
benefits in situations of reduced activity.
Those aged 60.5 who don't receive a full retirement
pension are compensated until they meet the conditions
for full rate pension in certain conditions (beneficiary for
at least one year, 12 years of affiliation to the
unemployment insurance scheme, duration of insurance
under the old-age pension scheme of at least 100
quarters).
There are exemptions from job seeking for those
unemployed persons in receipt of unemployment benefits
can be exempted from seeking employment. From age 55
those who have contributed for a 160 quarters towards
their old-age pension can derogate from the obligation to
seek employment. This exemption is open to all
beneficiaries of unemployment insurance for those over
57 and a half.
Minimum income recipients - Beneficiaries of the
minimum insertion Income (RMI) can retire when they
meet certain conditions.
There are no special measures for elderly unemployed's people as regards unemployment benefits.
The National Employment Action Plan (NEAP) was introduced on a phased basis in 1998.
Currently under the NEAP people aged 18 and under 64 years who are approaching 3 months on the Live Register
are identified by the Department of Social and Family Affairs and referred to FÁS for interview with a view to job
placement or offer of training. People remain on the live register while engaged with FAS under the NEAP until
they take up offers of employment or training. If they do not attend for interview with FAS, or having engaged with
FAS decline offers of employment or training, their cases are referred back to the social welfare local office for
review to determine if they continue to satisfy the conditions for receipt of unemployment payments.
The EAP was extended in 2006 to those aged 55 and under 64 years on the Live Register. The first selection of
customers in this age category began with effect from the start of July 2006. The involvement of the over-55s in the
EAP is likely to facilitate an increase in the rate of return to the workforce for this age group.
Older workers (over 50) who are made redundant, Some advantages are granted to enterprises that hire
benefit from longer periods of receipt of redundancy older workers in particular reduced social insurance
payments. They benefit from higher rates of contributions.
unemployment benefits for the first 6 months out of
work.
The Social Insurance Legislation is more favourable Unemployed over 63 are entitled to a small lump sum
towards workers over the age of 60 not receiving any subsidy from the Social Welfare Services to start a small
occupational pensions - after the exhaustion of payment, manufacturing business.
they may gain the right for re-entitlement after 13 weeks Qualified personnel was recruited and trained within the
of employment from the day of exhaustion instead of 26 framework of the Enhancement and Modernisation of the
weeks as is the case for people under 60.
Public Employment Services program to provide a
personalised active support to target groups including the
older unemployed .
There are no specific provisions or measures for older Pre-retirement age people can be engaged in active
unemployed people, though the system having a strong labour market measures (ALMM) such as vocational
IE
IT
CY
LV
24
Activation measures
Older people benefits from the general activation policies
for unemployed, in particular through “itinerarios de
inserción” that consists in individual measures adjusted
to each unemployed professional profile.
There is also a “Renta Activa de Inserción” for people
aged above 45 with special training programs and
employment plans. It is also possible to get the
unemployment benefits as a lump sum in order to help to
start a new self-employment.
Older unemployed people have access to assisted
contracts which aim to encourage a return to
employment. Aged unemployed can in particular benefit
from the Contract on initiative employment (CIE) for
which employers received financial incentives. In 2006,
20.000 CIE were reserved for job applicants over 50.
The older unemployed can also benefit from the
professionalisation Contract which is a flexible
employment contract.
Lastly, in order to facilitate old employees' recruitment, a
new type of fixed-term contract was created for those
aged 57 and over, with a maximum 36-month duration.
MS
Nature of unemployment benefits for older people
contributory links pays higher benefits for those who
have worked longest.
LT
Time of payment of the social insurance unemployment
benefit is linked to a qualifying period; this benefit is
paid for a short time (from 6 months with less than 25
years of contributions to 9 months with more than 35
years of contributions). Payment of unemployment
insurance benefit for older unemployed persons was
extended by 2 months for those within 5 years prior to
the retirement age, so the maximum duration for older
unemployed people is 11 months. The social insurance
benefit for the unemployed is reduced starting from the
fourth month of unemployment. Thus, it encourages even
the pre-retirement-age unemployed to return to the
labour market asap.
LU
HU
There are no specific unemployment schemes for older
workers, but focused initiatives are applicable to older
workers: employers get financial incentives if they hire
unemployed older workers and unemployment duration
is prolonged for older workers.
If an unemployed person was within three years of
retirement age, they could receive an early (preretirement) pension (from 1st of March 1991), financed
by the Labour Market Fund. Work opportunities were
restricted for recipients of this benefit which was
terminated in 1998. Between 1998 and 2005 preretirement benefit was replaced by „pre-retirement
unemployment assistance”, which offers a bridging
solution for unemployed persons who were close to
retirement age. The amount was 80% of the minimum
old age pension. The eligibility criteria is: receipt of 140
days of unemployment benefit before within 5 years of
reaching pensionable age; and having sufficient
contributions for eligibility for retirement; and having no
prospect of finding a suitable job.
At the end of 2005 unemployment benefits were replaced
by job-search assistance (composed of job–search benefit
and job-search allowance). After ending job-search
benefit one is eligible for job-search allowance within 5
years of retirement age, if no more than 3 years have
passed after the termination of job-search benefit, and the
beneficiary has enough service years for the old age
pension. It’s amount is 40% of the minimum wage (or if
25
Activation measures
training, retraining and improvement of professional
skills, measures for the rise of competitiveness,
temporary paid work and measures for self-employment
or business start-ups.
The State Employment Agency (SEA) has developed a
programme ensuring subsidized workplaces for the preretirement age unemployed. (5 years from retirement
age). Special ALMM for older people “Prolongation of
active life for seniors” have been introduced by SEA in
2006, proposing 9 new modular vocational training
programmes for unemployed at the pre-retirement age.
These modular training programmes include lectures by
experts (specializing in gerontology) and useful
information on how to obtain the status of selfemployment.
Employment
legislation
from
2006
provides
Supplementary support of employment for persons above
50. The duration of subsidy can not exceed 1 year (in the
case of fixed term labour contract – 3 months). The
amount of subsidy can not exceed 1 minimum monthly
wage, established by the Government.
In 2006, 82.1 % of those registered were assigned to
active labour market policy measures and after reestablishing skills or increasing qualification 42.2% were
engaged. About 38% of registered unemployed older
people over 50 participated in supported employment
measures: in public works, subsidised workplaces, in
Employment fund supported work programme, in
measures of training to acquire new skills, in
Occupational rehabilitation and in the programme of
renewal skills for long-term unemployed.
In general there are no specific employment measures for
older workers. The ruling on disability pensions,
although not essentially focused on older workers, gives
older workers with limited work capacity reductions the
opportunity to stay in the labour market.
According to the new rules since 1 of January
2007 ’wage support’ could be offered for those
employers, which
- among others – take over
employment of long-term unemployed or job-seeker
people above 50 at least for one year. This support is
limited to a maximum one-year period and its amount
couldn’t be higher than 50% of all wage and contribution
costs of the certain job.
Further extension of the START program has been
launched from 1 July 2007. The START EXTRA Card
has a purpose of granting assistance for 50+ or low
skilled persons to return to the labour market for long
term unemployment having difficulties finding job due to
their age or their low skills. In case of employing the
card holders the employer enjoy certain exemptions from
social contributions. This program for long term
unemployed that foresees exemption from itemised
health care contribution; exemption from paying
employer’s
contribution
and
social
insurance
contribution (29%) as well in the first year of
employment; and that in the second year of employment,
the employer has to pay contributions only after 15% of
the gross wages instead of general contributions.
MS
Nature of unemployment benefits for older people
the preceding average earning is lower than this amount,
the allowance is the same as this wage).
MT
No specific unemployment
unemployed people.
NL
There are no specific rules for unemployed older worker,
but in general, older workers will have a longer
employment history and most likely a higher income.
If unemployment continues beyond the duration of
unemployment benefits those eligible for these benefits
may apply for a benefit based on the Work and Benefits
Act. This implies means testing, both on capital and
(partner) income. Unemployment benefit recipients who
have become unemployed after the age of 50 are eligible
for a benefit based on the Act on Income Provisions for
Older and Partially Disabled Unemployed Persons.
In 2006, the duration of the unemployment benefit was
shortened from a maximum of 5 years to 38 months.
AT
Higher unemployment benefit and longer benefit
duration for persons older than 50, plus a smoother
means test in case of receiving unemployment assistance.
PL
The unemployed aged 50 or more who have an
employment record amounting to at least 20-years
receive the right to unemployment benefit for 12 or 18
months (longer than their younger counterparts).
Additionally unemployed people, whose contributory
history is 20 years or more, shall have the right to
benefits at a rate of 120% of the unemployment benefit.
Pre-retirement benefits can be granted to a person with
an unemployed status. At present a number of conditions
exist in which a person may claim pre-retirement
benefits
for
older
26
Activation measures
Besides, programmes supporting employment of older
workers” has to be mentioned as an important tool in this
context. Two labour market programmes were initiated
for the long-term unemployed. The target group was
registered unemployed above 50, who had faced
difficulties when seeking for a job. The main goal was to
promote re-entering to local labour market. Altogether
more than 65 thousand people participated in these
programmes, some 40 thousands of them found jobs.
Also the “Premium Years Programme“ serves for
maintaining the activity of older workers new to
retirement through part time retirement.
In 2008, the Employment and Training Corporation ETC
(the Maltese Public Employment Service) will be
launching a new Employment Scheme named
Employment Aid Programme.
Such scheme will offer financial assistance to employers
recruiting disadvantaged persons, including older
workers. This support is limited to a maximum one-year
period and its amount cannot be higher than 50% of all
wage and contribution costs of the particular job. In
addition, the older unemployed can already benefit from
a variety of training programmes offered by the ETC,
aiming at providing them with more skills.
The Institute for Employee Benefit Schemes (UWV) will
support any WW-recipient in finding work. For this, a
broad range of instruments is available, varying from
intensive coaching and mediation to training, or any
combination thereof. Progress of re-integration is
monitored once every 3 months and adjusted if
necessary. Older WW-recipients are relatively more
frequently eligible for this support, because of the longer
duration of their benefit.
Every WW-recipient may apply for the daily wage
guarantee (dagloongarantieregeling): if employment at a
lower wage is accepted by the WW-recipient and after
this employment terminates, the new WW-benefit will be
calculated on the basis of the old – not the last –
employment. For the guarantee to be applicable, two
conditions have to be met: employment is to be resumed
within a year after the first day of unemployment and the
second instance of unemployment is to occur within
three years after the start of the first. This second
condition does not apply to those over 55 years of age.
Promoting employment for unemployed persons aged
45+ is one of the core points of the public employment
service in the last years, in particular through training
and integration efforts.
No activation measures mentioned
MS
PT
RO
SI
SK
FI
SE
UK
Nature of unemployment benefits for older people
Activation measures
benefits, including people dismissed for work related
reasons after having turned 50 (women) or 55 (men) who
have insurance coverage giving them the right to a
retirement pension (respectively 30 and 35 years of
contribution payment) are entitled to benefits.
However, all of the aforementioned benefits will only be
granted after a 6-month period of unemployment benefit
collection during which there was no unjustified refusal
to accept an offer of suitable employment.
The benefits are assigned until the statutory retirement
age is attained. (60 years-women, 65 years –men).
Also pre-retirement benefits were closed to new
members from 2001.
There are specific rules for long term unemployed worker but not based specifically on age.
The Romanian unemployment legislation has no specific The older unemployed have non-discriminatory access to
rules for unemployed older workers. But, the calculation all activation measures developed by the Public
formula and the methodology for establishment of the Employment Service.
period of the benefit means that generally older workers
will be entitled to a longer benefit duration and a higher
levels of benefit.
Older unemployed persons can receive unemployment Unemployed persons, older than 50 years of age, have a
benefits for longer periods than their younger preferential right to certain activation measures.
counterparts. Persons with 25 years of contributions and
older than 50 are entitled to up to 18 months and those
over 55 up to 24 months while younger workers with the
same working experience have rights of 12 months.
There are no specific provisions for older unemployed persons.
The most important step undertaken by the government in order to reduce unemployment and long-term
unemployment represents Active Labour Market Measures. Unemployed persons older than 50 years of age are
viewed as so-called disadvantaged job-seekers. With objective to boost employability of the older persons, the
Labour Office can offer them education and further preparation for the labour market. Concerning the measures
aimed at job creation, the employers are eligible for and contribution for employing disadvantaged job-seeker; in
addition, the jobless disadvantages job-seekers could also apply for a state contribution if they become self-employed
An unemployment pension was abolished in 2005 and replaced with a right to prolonged unemployment allowance
that can be paid after the 500-day maximum period for older workers. After 500 days individuals are entitled to
receive old age pension at the age of 62. Those who have chosen old age pension are not entitled to unemployment
benefits. If a person does not choose to receive pension at the age of 62, he/she may receive additional days of
unemployment allowance up to the age of 65.
The labour market support recipients aged 55 or more who at the time they became unemployed satisfied the
employment condition (43 weeks of employment during preceding 28 months) are exempted from the means test.
An unemployment pension may still be granted to a long term unemployed person who was born before 1950 and has
reached the age of 60. A further requirement: certificate of unemployment, the person has received the maximum
amount of earnings-related allowance, and has had a paid job for at least 5 years during the past 15 years.
The minimum age of the beginning of unemployment, which will eventually lead to a pension, was raised in 2003
from 53 to 55 years.
The Swedish unemployment insurance does not have No specific activation measures target or any specific
specific rules for unemployed older workers.
access to active employment measures for the older
unemployed.
Unemployed men aged 60 or over can currently claim
the guarantee credit element of Pension Credit (PC)
instead of Jobseekers Allowance, and are not required to
actively seek employment to qualify for this benefit. This
is an equality issue, and equalises men’s position re;
benefits and work with that of women, who have a State
Pension Age (SPA) of 60, whereas men’s SPA is 65.
When the women’s SPA gradually increases to age 65
between 2010 and 2020, the age of eligibility for PC for
both sexes will rise in line with the increase in women’s
27
The employment programme to help older workers, New
Deal 50 plus, has supported over 150,000 entries into
work since its launch in April 2000, and back-to-work
help is now available to people claiming Pension Credit
(from age 60). The UK’s Age Positive campaign has
influenced employers by promoting the business case for
age-diverse workforces, and every year sees increasing
interest from employers in adopting non-ageist
employment practices.
The UK Government have taken action to ensure that
MS
Nature of unemployment benefits for older people
SPA. Men and women aged below the women’s SPA at
any point in this 10 year period will be required to
comply with Jobseekers Allowance (JSA) regulations
requiring mandatory job search activity in order to claim
the JSA.
Activation measures
those already choosing to work for longer are given the
opportunity to do so. In October last year, new
legislation will come into force, which, for the first time,
will give people the right to challenge age discrimination
in the workforce. It also introduces a default retirement
age of 65, below which employers will not be able to
force people to retire on the grounds of age (unless it can
be objectively justified).
Source: National replies to the SPC questionnaire.
2.4.
Invalidity benefits: passive versus active benefits
The section discusses invalidity benefits that have due to their specific nature or lack of
control over access into the schemes in some countries become one of the main paths of early
labour market exit. Around or more than 20% of people aged 55-59 are on invalidity benefits
in EE, HU (30%), LT (24%), MT (44%), RO (28%) and SE and in a number of Member
States, the take up is above 10% (BG, DK, FI, LV, NL, PL, SI, SK, UK). In other Member
States, the levels of take-up are lower (see table 6 below). Generally, take up declines in the
age bracket 60-64, although it can increase in some Member States (18% in NL, 24% in FI,
28% in HU and SE).
Table 6 – Take up of specific invalidity benefits in EU27
Life expectancy at 55
LV, BG, LT, RO, HU, EE, SK, PL,
<25
CZ
DK, SI, MT, BE, UK, LU, PT, IE,
25-27
EL
>27
NL, DE, FI, CY, AT, ES, SE, FR, IT
Take-up of invalidity benefits as share of population 55-59
low (< 5%)
medium (5-15%)
high (>15%)
EE, HU, LT, PL,
BG, LV
RO, SK
IE, PT
BE, DK, LU, SI
MT, UK
ES
CY, DE, FR, NL
FI, SE
Take-up of invalidity benefits as share of population 60-64
low (< 5%)
medium (5-15%)
high (>15%)
Life expectancy at 60
BG, LV, RO, LT, SK, HU, EE, CZ,
<21
PL
LV, SK
BG, EE, PL, RO
HU, LT
DK, MT, SI, UK, BE, IE, EL, LU,
21-23
PT, NL
PT
BE, IE, SI, UK
DK, LU, MT, NL
>23
DE, CY, AT, FI, ES, SE, IT, FR
CY, ES, FR
DE
FI, SE
Note: These figures are generally taken from administrative sources are not necessarily completely comparable.
Member States for which information is not provided do not have such information available. Source: National
replies to the SPC questionnaire. Figures generally refer to 2006.
The table above also shows, that although life expectancy is comparable in groups of
countries, the take-up of invalidity pensions between them differs tremendously, the
difference being more, than 10% of population. This phenomenon raises serious policy
questions of whether high take-ups in certain countries are justified.
Although they were initially created to provide people incapable of work with a sufficient
income, invalidity benefits became a tool to manage labour market difficulties in the 80s and
90s. In the UK, the number of incapacity benefits claimants more than trebled between the
late 1970s and the mid-1990s as employment in traditional industries declined rapidly. Since
the mid-1990s the number of people coming onto incapacity benefits has fallen by a third, but
the total number of claimants remains broadly the same because people stay on benefits
longer.
28
Recent work from the OECD2 highlights that developments in sickness and disability benefits
are not necessarily related to trends in objective or subjective health indicators but are
influenced by policies and social phenomena. Namely in some countries it can be socially less
stigmatising to be out of work because of health reasons than unemployment. It can also be
observed, that many people with health problems can work, and want to work. Having
policies based around an assumption that they cannot work can be fundamentally flawed.
Helping those people to work is potentially a ‘win-win’ policy: it helps people avoid
exclusion and have higher incomes, at the same time as raising the prospect of higher
economic output in the long term3.
Some Member States see the take up of invalidity benefits as not endangering labour market
activity (like CZ, DE or IT). Nevertheless, although disability benefits cannot be regarded as a
typical early retirement, there can be large numbers in this category approaching retirement
(like in BE).
Disability was perceived in many countries (especial in Eastern Europe) as a physical or
mental quality preventing a person from working rather than reducing his/her work capacity.
For example, categories of invalidity were attributed (from 1st to 3rd category) to people
based on the gravity of their disease the main purpose of which was to calculate disability
benefit and provide some other social services and benefits (still actual in LV, RO, SI). In
some Member States (EE, LT), these practices have changed and the focus shifted on to
capability to work and participate in the labour market.
Attitudes have indeed changed considerably in the last few years. Several Member States
have introduced changes to their disability schemes, making assessment of incapacity to work
more objective and broader (LU, SK), incorporating a larger variety of factors to be analysed
(UK) and in a number of cases focusing on the remaining work capacity (NL), trying to find a
matching occupation/work conditions to the person (for instance HU). In SK, the new legal
definition of disability is expected to reduce the possibility of undesirable manipulation of
medical records (it is expected to limit the occurrence of different medical assessment of
persons with comparable situations).
A challenging dimension of recent reforms is incorporating or rehabilitating disabled people
back into the labour market. According to a study carried out by the Pellervo economic
research institute in FI, one-third of disabled people are just as fit and willing for work as
ordinary Finnish wage-earners. In spite of this only every fifth disabled person has a job. The
main reason for that was employers' attitude towards the disabled. Also LT acknowledges that
the use of skills and knowledge of the disabled on the labour market is rather limited as
motivation and economic activeness of the disabled is rather low at present. In order to
progress in that area, efforts have been made in a number of Member States, relying on
different types of measures.
•
These can be offering flexitime regimes and telework (DK), combining partial
incapacity to work with partial work regimes (SE), retraining, counselling, internships
in enterprises, rebuilding workplaces to take into account special needs of the disabled
often financed by the state etc.
2
M. F. Forster Sickness, Disability and Reintegration strategies: A Comparative Overview. Santander, 1620/07/2007. http://www.oecd.org/dataoecd/43/60/39154239.pdf
3
Sickness, Disability and Work: Breaking the Barriers (Vol. 1): Norway, Poland and Switzerland. Published
7/11/2006. http://www.oecd.org/document/25/0,3343,en_2649_37411_37600345_1_1_1_37411,00.html and
Transforming disability into ability. Published 27/02/2003.
http://www.oecd.org/document/14/0,3343,en_2649_37411_35290126_1_1_1_37411,00.html
29
•
Also incentives have been offered to employers to employ the people with reduced
capacity for work paying part of their salary, offering tax incentives or setting certain
quotas to be fulfilled regarding the percent of the disabled from the total of the
employed in the company. For instance in HU quotas are set by law on percentage of
all posts in the company to be fulfilled with disabled workers, while LT and PL have
chosen to provide positive financial incentives (exemptions of social contributions) for
employment of disabled workers.
•
The prevention of invalidity and professional rehabilitation of people with health
problems can also make an important contribution. Prevention of health problems has
to start from an early age and involves promoting healthier life styles and working
conditions as well as the early detection and treatment of health problems.
Although Member States made noticeable progress over the last years as regards modernizing
incapacity pension systems, there are still some features in the systems that might act as
barriers to returning to working life.
•
In some Member States, recipients of disability pension are not allowed to work while
getting their pension (IE), though some Member States allow working and receiving
benefits at the same time where no restrictions are imposed (BG, CZ, EE, LT, LV,
NL, RO, SE, SK).
•
In some others there are restrictions regarding the hours worked (DE) or wage earned
an/or other income received (HU, FI, FR, PL, SI, DK). And in BE and PT the
allowance is reduced in a progressive way, which makes it possible to encourage the
resumption of work.
•
Furthermore, there are several restrictions set in law (like in SI where the right to
occupational rehabilitation accrues to insured persons of invalidity category II, who
have not reached 50 years and who may be trained for other work which they will
perform full-time).
Table 7 - Invalidity benefits for older workers
MS
BE
BG
Schemes and eligibility
To be considered to incapacity to work within the
sickness insurance, three conditions have to be met:
absence of any work; the interruption has to be the
direct consequence of appearance or functional
disorder worsening; the work capacity has to be
reduced to a third or less of what the reference person
could gain.
During the first 6 months of invalidity, the work
capacity is evaluated on the basis of the worker's usual
profession, after that of all the professions that a person
of similar training and condition could exert. If
capacity lasts more than one year, it is noted by the
medical Council that can invite the person for a control
examination. Allowances levels depend on lost
remuneration, the duration of the incapacity for work
and the marital status of the interested party- minimum
amounts and maxima are also set.
There are different schemes for miners, public
employees, self-employed, Accidents at work and
occupational diseases scheme,
An invalidity pension shall be granted to persons with
loss of working capacity equal to 50%+ and for the
persons beyond the standard retirement age it is a life-
30
Rehabilitation measures
Persons in incapacity for work have the possibility of
resuming work partially and recovering thus
gradually. The person has to have incapacity of 50%
on the basis of a medical evaluation to benefit from
this scheme. The authorisation specifies nature, the
volume and the conditions of achievement of work.
During the resumption of work, the person has to pass
every 6 months a medical examination.
When it appears that a person can have no reference
occupation, he can enter vocational rehabilitation
comprising training, accompaniment or apprenticeship
which constitutes a program aiming to restore,
develop completely or partially aptitude for work.
Costs are covered by compulsory insurance health
care. The refusal to take part in a proposed
readaptation is sanctioned - allowance is reduced by
10%.
Persons insured against all social insurance risks shall
be entitled to cash allowances for disablement by
general sickness, where there are no grounds for
MS
Schemes and eligibility
long pension. The amount of invalidity pensions in the
statutory scheme depends on the length of insurance
and contributory income. Depending on the degree of
the lost working capacity, the amount of pension shall
be between 85-115% from the minimum amount of the
statutory pension.
The degree of the lost working capacity and its term
are determined by the Territorial expert medical
commission and the National expert medical
commission. The term of invalidity pension shall be
from 1 to 3 years and depends on the character of the
loss of capacity and on the possibility for its
improvement.
CZ
An insured person is entitled to claim a full/partial
disability pension when he has become fully disabled
and acquired the requisite insurance period or fully
disabled due to an occupational injury. Minimum
insurance periods for claiming entitlement to
full/partial disability depend on the age of an insured
person and are: up to 20 years - less then 1 year, from
20 to 22 years - 1 year, from 22 to 24 years - 2 years,
from 24 to 26 years - 3 years, from 26 to 28 - 4 years,
above 28 years - 5 years. An insured person is
considered as fully disabled if his ability to work has
been reduced by at least 66 % or he is able to work
only under special conditions. An insured person is
considered as partially disabled if due to long-term
adverse state of health his ability to work activity has
been reduced by at least 33 % or his long-term state of
health seriously aggravate life conditions. There are not
different conditions according age in the schemes only health conditions are crucial issue.
The disability pension scheme was reformed in 2003 to
expand and support the already existing active
orientation in social policy. The assessment of the
citizen shifted to a focus on the remaining working
capability. A disability pension will be awarded if the
working capacity is such that obtaining an income
which will ensure partial or full self-support is not
possible. There is one single disability pension
allowance which is to cover all general maintenance
costs. It is paid as a single total amount which is liable
to tax. The level of disability pension for single persons
corresponds to the level of unemployment benefits, and
it is adjusted on the basis of the income of the
pensioner and any spouse or cohabitant.
During assessment 12 different elements should be
described, but the actual weighting of these elements
depend on what is relevant in the individual case. A
flexi job can only come into consideration when there
are no possibilities for re-joining the labour market in
an ordinary job without public subsidies. In
continuation of this a disability pension can only come
into consideration when all possibilities of activation
and rehabilitation have been depleted and the citizen
cannot become self-supporting.
The risk of invalidity before reaching statutory
retirement age is covered by the Reduced Earnings
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granting a pension.
Persons insured against all covered social insurance
risks, except employment injury and occupational
disease, unemployment, disability, old age and death
shall be entitled to cash allowances for preventive care
and rehabilitation if social insurance contributions
have been remitted or are due for them for a period of
six calendar months preceding the month during
which the preventive care and rehabilitation is
conducted.
When a person has 50%+ lost working capacity the
evaluation authorities shall give assessment for his/her
ability to work and when necessary they order
occupational rehabilitation.
People with disability pension could ask for work
rehabilitation on the Labour Offices. Individual plan
of the work rehabilitation includes goals of
rehabilitation, form, timetable and evaluation.
Rehabilitation takes 24 months at most and further
resumption is observed during medical examination.
People with a disability are equally entitled to
vocational rehabilitation, which comprises advisory
activities aimed at the choice of profession, choice of
employment or another gainful activity, theoretical
and practical preparation for employment or another
gainful activity, mediation, maintenance and change in
employment, change of profession, and the creation of
suitable conditions for employment or another gainful
activity to be carried out.
If the working capacity can be improved through
activation, vocational rehabilitation or other
preventive measures so that the person concerned can
be referred to seeking employment on the ordinary
labour market or in a flexi-job, no pension will be
awarded. The working capacity of the person thus
determines whether a disability pension can be
awarded.
The local authorities are obliged to keep themselves
informed about the pensioner’s situation in order to
asses whether the pensioner still meet the
requirements for receiving a disability pension. If the
pensioner’s working capacity is improved to an extent
that the pensioner is assessed to being able to support
himself/herself through remunerated work, the
pension can be discontinued.
Measures to promote the individual's integration into
working life (occupational rehabilitation) aim at
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Capacity Pension. Insured persons having paid
contributions to the public pension fund during three out
of the preceding five years and who are either partially
or fully incapable of working (independent of the
profession) can claim benefits. The full benefit can only
be drawn on grounds of a medically diagnosed reduction
of working capacity. A person who is not capable to
work for three hours on a daily base is eligible for a full
invalidity pension. A person whose working capability
is between 3 and less than 6 hours on a daily base is
eligible for a half invalidity pension. In the case of a
closed job market a full invalidity pension is granted to
these persons.
Right to receive invalidity benefits is granted to person,
who is at least 16 years of age and has been declared to
be permanently incapable to work, whose loss of
working capacity is 40 to 100% and who by the initial
date of granting of the pension has acquired a certain
pensionable service or accumulation period in Estonia.
In case of permanent incapacity for work that has
emerged as the result of a labour injury or professional
disease, the pension for incapacity for work is granted
without a pensionable service period requirement.
Invalidity pension is paid until the age of the statutory
old-age pension.
Disabled individuals may retire to an invalidity
pension, as long as they have a disability percentage of
at least 50%.In such cases certain insurance records are
required, in combination with the disability percentage
of the individual, with the exception of the cases where
the disability is due to an employment accident, in
which case no insurance record is required. An insured
person can be granted a full invalidity pension by IKAETAM, provided that their invalidity rate is at least
80%, while a minimum of 67% invalidity rate entails a
25% reduction of the pension benefit and an invalidity
of 50% a 50% reduction.
In addition to the provisions already mentioned, certain
provisions have also been adopted, aiming at setting
criteria to deter the mal-using of the provisions for
invalidity retirement.
The qualifying period in order for an insured to fulfill
the criteria of an invalidity pension, are the following:
(a) 1,500 insurance days, of which at least 600 in the
last 5 years before the occurrence of the disability, or
(b) 300 working days, for young persons and in
particular up to their 21st year of age, which are
gradually increased to 4,200 days by adding 120 days,
on average, for each year of age beyond the 21st.
Rehabilitation measures
preserving, improving and establishing or reestablishing the capacity to work of disabled persons
or persons who are at risk of becoming disabled,
according to their individual abilities, and ensuring
their integration into working life on a long-term basis
if possible.
Steps are being taken to ensure that disabled women
have equal opportunities in working life. These
measures are being accessed through the insurers in
the various social insurance branches. They basically
aim at fully reintegrating the individual into the
regular labour market. The measures are subject to
regular quality control by the insurer.
Work-related rehabilitative services can only be
provided to persons, who are registered as
unemployed.
The definition of permanent incapacity takes into
account the continued alteration of the health as well as
its repercussion in the capacity to continue working.
The following degrees of incapacity exist:
- Partial permanent incapacity, if a decrease of 33%+
in the normal return for its profession occurs a
compensation in a single payment equivalent to 24
monthly installments is made;
- Total permanent incapacity, disqualifies the worker
Suitable health treatment will be provided, especially
functional rehabilitations, vocational guidance,
vocational training for readjustment to the previous
work or for reeducation for a new profession, etc.
There are a few amendments to be made to the system
that are currently on the way.
For people with “Total permanent incapacity”, the
pension is compatible with any other work in a
different profession.
32
Starting in autumn 2007 measures as career
counselling, retraining, technical aids and equipment
for working and adaptation to premises and
equipments will be provided also for working disabled
people with objective to prevent unemployment.
There are specific National Policy Subsidy
Programmes for New Job Posts and for New SelfEmployed of vulnerable social groups, which aim at
promoting employment of people with special needs,
former drug addicts, former prisoners or young
lawbreakers who are at social risk.
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Schemes and eligibility
only for the realization of the fundamental tasks of the
profession, a pension of 55% of the regulating basis is
paid and 75% for pensioners aged 55 or more who
don’t work;
- Absolute permanent incapacity (prevents making any
type of activity, the provision consists of a pension in
amount of 100% of the regulating basis);
- A large invalidity (for person that needs help of
another person to carry out the most essential acts than
the life, the provision consists of a pension whose
quantity is the 100% of the regulating basis, increased
by 50% for the person attending him).
The disability insurance of the general Social Security
of workers of the private sector is open to employees
justifying of a minimum duration of affiliation of 12
months and of a minimum amount of contributions or
number of hours worked. A person insured is regarded
as invalid when its work capacity is reduced by at least
2/3. The disability status is awarded by Social Security
doctors and in addition to observed deficiency also age,
social background, training and professional
experience, physical and mental faculties are taken into
consideration. There are three categories of disability
according to their gravity. The pension rate depends on
the category of disability. It is often supplemented by a
complementary disability pension coming from a
professional or private insurance contract.
The "Allocation to the disabled Adults" (AAH) aims at
ensuring an income for persons affected of a rate of
permanent disability of at least 80% or ranging
between 50 and 79%. The AAH is allocated under
income conditions and financed by State budget. In
derogation from the common rules, the recipient of an
invalidity or AAH pension can obtain the payment of
his pension rights at "full rate" as from the 60-year age.
To qualify for the award of an Invalidity Pension a
person must satisfy both medical and social insurance
conditions as follows: Medical Condition - be regarded
as permanently incapable of work (with likelihood for
life or if incapacity has existed for 12 months prior to
the date of the claim, and Deciding Officer or an
Appeals Officer is satisfied that the person is likely to
be unable to work for 1 year from the date of the
claim). Social Insurance contributions conditions: A
total of at least 260 weeks contributions paid and 48
weeks contributions paid or credited in the last
complete tax year before the date of the claim.
Payment lasts as long as a person satisfies the above
conditions and is under 66, or until the claimant
receives another Social Welfare pension. Persons in
receipts of sickness benefits for longer than 5 years
may be awarded Invalidity Pension. Payments are
made up of a personal rate for the individual claiming
and extra amounts for qualified adult and child
dependents, where relevant and account is not taken of
other resources which a person may have.
There are two types of invalidity pensions: the ordinary
invalidity pension (slightly reduced capacity, but
capable of working) and lost capacity pension (full and
33
Rehabilitation measures
The invalidity pension is always provided
temporarily. It is revised when there is modification
of the health status of the person. Control of
eligibility is carried out quarterly on the basis of a
questionnaire covering health status and, if necessary,
professional activity. There is suspension or
withdrawal of the pension when the capacity of the
pensioner's gain becomes higher than 50 %.
The AAH is also conceded for a certain duration.
Recipients have access to treatments for functional
readjustment and to education or vocational
retraining or training periods in establishment or in
company. Related expenses are met by the sickness
insurance. The State ensures disabled persons'
remuneration during their training.
A recipient of disability pension should not work
while getting this pension. However, they may, with
prior written permission from the Department of
Social and Family Affairs, be exempt from this rule
to: do a course of training which may lead to other
employment, or do work to help recovery, which will
lead you to rejoin the workforce, or start light work or
training that you would not normally be paid for. A
recipient may get the Back to Work Allowance if they
have been getting Invalidity Pension for 15 months
(12 months if aged 50 or over) or other social welfare
payments. This scheme allows them to return to
employment or self-employment and keep a portion of
your social welfare payment for 3 or 4 years. The
Back to Education Programme is a scheme for people
getting Invalidity Pension or other social welfare
payments for a certain period of time. This
programme enables them to take an approved second
or third level course at a recognised school or college
and still receive a payment.
In case of ordinary invalidity 2 check-ups are
conducted during the first 3 years. The amount of
benefit can be recalculated in case of earnings beyond
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Schemes and eligibility
permanent incapacity to work). They can be granted to
persons who have at least 5 years of contribution
history, 3 of which on the last job before the
occurrence of disability.
It covers the active population (employees and selfemployed) providing earnings-related pensions and
other benefits depending on contributions and the
duration of affiliation.
There is total invalidity with 100% incapacity to work
(person expected to remain permanently incapable of
work) and partial divided into 3 groups. In the case of
partial invalidity pension the person is allowed to earn
income proportional to the extent of his work ability.
An insured person with at least 3 years of insurance,
has a right to an invalidity pension if recognized as an
invalid. The Medical State Commission for ExpertExamination of Health and Working Ability shall
determine the classification of invalidity and causes, as
well as the time the invalidity commenced and
duration.
The invalidity pension depends on the invalidity group
(first, second or third) as well as the average monthly
wage subject to insurance contributions of the insured
person for any consecutive 36 months in the previous 5
years as well as the insured person’s individual length
of period of insurance and the maximum length of
period of insurance.
For adults and for those under 18 who are (or were) insured by state social insurance a level of work capacity
is defined according to the medical, functional,
professional and other criteria in order to evaluate
person’s work capability and employment possibilities.
The loss of capacity for work is assessed by taking the
percentage of the level of capacity for work from
100%. Disabled persons with at least 45% reduction in
capacity for work become entitled to state social
insurance lost working capacity pension. The amount
of disability pension is calculated on the category of
disability, the qualifying period of the person and
former salary.
As regards long term illness the sickness certificate
may be extended for up to 122 days. After that a
disability may be awarded by the Disability and
Employment Capacity Assessment Office. There is
also a special disability scheme for officials and
military personnel - state disability pensions. All
pensions and benefits for insured persons are paid from
the State Social Insurance Fund, for non insured
persons from the State budget.
LU
There are two types of disability benefits: full work
incapacity (temporary or definite) and partiallyreduced work capacity. Disability benefits are subject
to taxation and social security contributions.
Entitlement to disability benefits requires the
beneficiary to prove a period of 12 months of
34
Rehabilitation measures
a fixed limit. In case of incapacity pension though
payment of benefits can be ceased in case of any
additional earnings and refusal for medical check-up.
Measures for the access to employment of disabled
people in the scope of their rehabilitation to society
have been introduced in the form of two projects: one
aiming at the vocational training of people with
disabilities so as to better equip them in their effort to
join the labour force and the other offering incentives
to the employers to hire people with disabilities.
For unemployed job-seekers with disabilities, starting
from 2005 measures ‘Subsidized employment of
unemployed disabled persons’ and ‘Subsidized
employment of unemployed persons from the target
groups’ are provided, also from 2007 a measure
‘Subsidized employment of unemployed”. The
measure is implemented in three directions – practice
(on-the-job training) with employer (for youngsters in
age 18-24 with higher or vocational education),
perfection of professional skills in subsidized work
place (for people in age 25+ until official retirement
age), and digestion of professional skills in the
subsidized work place (for unemployed in working
age).
The following vocational rehabilitation services are
provided:
vocational
guidance,
consultations,
assessment of professional capacities, restoration or
training to acquire new skills, retraining. Persons
participating in the vocational rehabilitation program
receive a vocational rehabilitation benefit (paid up to
180 calendar days since the beginning of the
program). It is allocated and paid irrespective of other
income received.
Support for job creation is provided to the employers
and disabled people are helped to find suitable
employment by establishing social enterprises. The
aim of such enterprises is to employ persons in the
target groups who have lost their professional and
general capacity for work, are economically inactive
and are unable to compete in the labour market - to
promote the return of these persons to the labour
market, their social integration as well as to reduction
of social exclusion. These enterprises may be granted
State aid for partial reimbursement of wages and
social insurance contributions, subsidy for the creation
of workplaces, adaptation of workplaces and subsidy
for the training.
There is no statutory defined periodical review; a
review is possible at any time.
The measures enacted under the new law on partial
disability in 2002 are designed:
- on the one hand, to speed up the prescribed
procedures in the realm of social security by
coordinating them with the rules safeguarding the right
to work and,
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Schemes and eligibility
insurance periods during the 3 years preceding the
date of claim or the expiry of the sickness benefit.
This period is not required if the disability is caused
by an accident or a professionally recognised illness,
occurring during the period of affiliation. The
disability pension is granted on condition that the
beneficiary ceases any self-employed activity subject
to insurance (for which the professional income
exceeds one third of the minimum social income).
Benefit is made up of the flat rate increase, the
proportional increase related to periods during which
contributions have been paid and an end of the year
allowance.
Tide-over allowance for partial invalidity is also
subject to taxation and social security contributions. If
it has not been possible to redeploy a worker through
the general labour market while unemployment
benefit is payable, he or she is entitled to a tide-over
allowance corresponding to the amount of the
disability pension. While in receipt of it, the worker
must remain available for employment, and the
allowance is only payable for as long as appropriate
work is found.
Rehabilitation measures
- on the other hand, to supplement the present
protective mechanism with occupational-reintegration
measures for workers whose application for an
disability pension is rejected even though they are unfit
to resume their previous duties.
If workers are found to be unfit to resume their
previous duties, the matter is referred to a joint
committee responsible for redeployment measures.
The task of the joint committee, comprising
representatives of management, labour and the
relevant public authorities, is to decide on
redeployment, either internally, within the employee’s
own company, or externally, through the labour
market.
Although there are rehabilitation possibilities foreseen
in the case of permanent disability pension,
rehabilitation measures are normally the exception.
In case of partial disability, an medical assessment by
the occupational medical service determines whether
or not the person can return to the last job. If so,
companies with more than 25 employees are obliged
to find an appropriate job for their worker, be it a
different job in the same company or the same job at
reduced working hours (internal redeployment). If
employers can prove that this is impossible or would
come at an excessive cost, external redeployment is
sought.
Eligibility depends on the reduction of the working The employer is obliged to employ the worker with
capacity certified by the medical committee (at least reduced working capacity in the same job and
67%), age at outset of invalidity and the insurance profession. If it is not possible, the job offered should
period acquired. Another condition is that the recipient be without any further damage to his/her health. This
doesn’t work regularly or his/her income is much lower case he/she is entitled to a certain income supplement
than the income acquired before becoming disabled. and the employer may draw on a rehabilitation
There are three classes of invalidity pension. The support. It is mandatory for each employer with 20 or
consideration of medical eligibility conditions in more employees, to fill 5% of all posts with persons
Hungary belongs to the National Medical Expert with disability (obligatory quota). For persons with
changed working capacity sheltered companies
Institution.
supported by state subsidy help to labour market
If working capacity reduction is below 67% one is reintegration. The date of supervisions is established
eligible to Regular Social Annuity (at least 50% case by case by the medical committees in the frame
working capacity reduction) or Temporary Invalidity of report in which the invalidity is declared (usually
Annuity (5 years before retirement age, minimum 50% once in 1-3 years period).
In 2007 a law was adopted on rehabilitation annuity,
working capacity reduction).
entering into force since 2008. It brings a fundamental
innovation: change in working capacity shouldn’t lead
to inactivity and people with disabilities should reenter the labour market. It involves a new assessment
methodology. Payment period of annuity is maximum
3 years. Further, additional measures are being
worked out to change the attitude of employers,
strengthening their inclusion behaviour.
The Invalidity Pension scheme in Malta is also currently under review and with effect from 01.07.2007, to
qualify for an Invalidity Pension, a person must satisfy each of the following 4 conditions:
o the person is incapable of carrying out regular full-time or part-time employment or from being selfoccupied for not less than 6 months prior to claiming an Invalidity Pension;
o after determination (after consultation by an appointed medical panel) that the person’s incapacity is of a
permanent nature and if not, that the person is incapable of carrying out regular full-time or part-time
employment or from being self-occupied for at least 1 year;
o before the incapacity took place, the person was carrying out regular full-time or part-time employment or
35
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Rehabilitation measures
was self-occupied or was registering for employment under Part 1 of the employment register, on a regular
basis for a period of not less than 12 months; and
o the person must satisfy the contribution conditions on the date of the claim.
To qualify, a person needs to have 250 weeks of paid contributions as employee or self-employed, with annual
average of 50 weeks of paid or credited contributions. A reduced rate of pension is paid if contribution average
is between 20-49 weeks per annum. Rates paid also vary, depending upon whether a service pension is payable
and whether the person (if male) is married and supporting his spouse. Malta does not pay any increases to
women who are supporting their husbands. However this issue is due to be addressed in the near future in line
with Malta’s policy to eliminate gender discrimination. Rates paid range from Lm21.17c (€49.31) to Lm49.86c
(€116.14) per week. Rates are adjusted annually based on increases in cost of living, and in some cases, in
wages.
Under the Maltese system, persons who are receiving Invalidity Benefits are precluded from carrying out any
employment activity.
The Work and Income according to Labour Capacity The Institute for Employee Benefit Schemes (UWV)
Act is intended for those fully and permanently will support any invalidity pension recipient in finding
disabled. They will receive a benefit of 75% of their work. In case of sickness the required continuation of
former wage (with a ceiling). Partially disabled (>35%; wage payments by the employer will be compensated
also fully not-permanently disabled) will receive by a no risk polis. If necessary specific adjustments to
initially a benefit of 70% (former wage minus work stations will be compensated.
remaining wage, period depends on amount of years
worked); at a later stage either a wage-supplement (if
the amount of hours worked is high enough) or a
minimum-level related benefit (if the amount of hours
worked is not high enough).
Reassessment is made when necessary. Benefits can be
prolonged until the age of 65.
In case of invalidity with duration of at least 6 month An application for an invalidity pension is also an
and a doctor's confirmation, persons are entitled to application for rehabilitation. Beneficiaries are obliged
receive an invalidity pension. In general the duration of to take part in rehabilitation measures. The principle is:
this pension is limited (2 year). Afterwards, recipients rehabilitation before long term benefits to foster
have to apply once again.
reintegration as quick as possible.
The disability pension can result either from complete Vocational rehabilitation is aimed at facilitating to a
or partial inability to work. An insured person is person with disability to find and keep an appropriate
entitled to this benefit when all of the following employment, and to acquire and maintain vocational
requirements are fulfilled:
advancement. Rehabilitation is carried out first by
assessing the ability to work, (in particular by medical
o is incapable of work,
o has the required pension contribution and non- and psychological examinations), then carrying out
contribution period,
vocational guidance taking into consideration the
o the inability to work occurred in the periods assessment of ability to work, followed by selection of
precisely defined by the law (i.e.: period of an appropriate job and equiping the workstation,
insurance, employment, receiving the unemployed finally determining technical measures enabling or
benefit etc.) or not later than within 18 months after facilitating job performance etc.
the completion of the periods.
The main forms of activity supporting vocational and
A disability pension is granted irrespective of the social rehabilitation process of disabled persons shall
length of the documented contributory and non- include participation of these persons in occupational
contributory periods, when disability to work is caused therapy workshops or holiday rehabilitation stays.
by an accident on the way to or from work.
Employers of people with disabilities, in particular in
Starting from 2006 decisions certifying incapacity for the so-called sheltered workshop enterprises also
work are issued for a period not longer than 5 years or enjoy additional benefits that are aimed to encourage
for a longer period, if there is no prognosis to employment of people with disabilities.
restoration of earning capacity.
In 2006 the average age of people receiving disability
pension was 55,3.
A new invalidity scheme was recently approved (May 2007). There are two different types of invalidity
schemes. Relative invalidity: Permanent incapacity for work not due to professional reasons after the person has
entered the Social Security and confirmed by the System for Disability Assessment. It is deemed permanently
disabled the insured person who cannot earn more than 1/3 of the earnings he/she would get if he/she carried out
his/her activity on a regular basis. The qualifying period is 5 continuous or non-continuous qualifying calendar
years with earnings registration. Absolute invalidity: Permanent incapacity for any type of work. The assumption
36
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Rehabilitation measures
is that there is no possibility of labour market reintegration until 65 years old. The qualifying period is 3
continuous or non-continuous qualifying calendar years with earnings registration.
Invalidity pension shall be entitled to the insured who Depending on the disease, the disability pensioners
have lost, totally or at least half of their work-capacity, undergo medical re-examinations every 6 - 12 months,
until standard pension ages are reached. The right to
due to:
disability pension shall be modified or shall cease
a) occupational accidents, according to the law;
upon the examination. The following disability
b) occupational diseases and tuberculosis;
c) ordinary diseases and accidents which are not pensioners shall not be subject to any periodical
medical re-examination: a) the pensioners who have
related to work.
Depending on the requirements of the job and degree disabilities affecting in an irreversible manner their
of work-capacity loss, there are 3 degrees of loss of the work-capacity; b) those who have reached the ages
work-capacity. The insured who has lost work-capacity provided by the present law for obtaining the
due to ordinary diseases or accidents which are not compulsory pension; c) those up to 5 years younger
related to work shall benefit from disability pension if than the standard pension age, and have completed the
they complete the required contribution period with full contribution periods.
The disability pensioners are obliged to attend the
respect to age.
rehabilitation programmes drawn up by the social
insurance expert physician who issued the disability
classification decision, in order to be reinstated
socially and professionally in the same job or in
another one.
The insured person acquires the right to invalidity Pension system grants the right to an occupational
pension if his invalidity is the result of either rehabilitation as a comprehensive process in which
employment injury or occupational disease (regardless insured persons are professionally, physically and
of pension qualifying period completed) or off-the-job psycho-socially trained for an alternative vocation or
injury or illness (provided at the onset of invalidity work and re-engaged in a working environment.
he/she has completed the pension qualifying period The right to occupational rehabilitation accrues to
covering at least one third of the time from his/her insured persons of II invalidity category, who have not
attaining 20 years until the development of invalidity). reached 50 years and who with regards to remaining
Invalidity pension for the case of invalidity caused by work capacity may be trained for other work which
employment injury or occupational disease is assessed they will perform full-time.
without reduction related to age on retirement from the If adaptation of work post is required, the Pension and
pension rating base in the same amount as old-age Invalidity Insurance Institute covers the costs as well
pension for at least 40 years (men) and 38 years as rehabilitation. The insured person and the provider
of rehabilitation are obliged to report to the Institute
(women) of the pension qualifying period.
on the implementation and progress at least every 6
months. During the rehabilitation as well as after it the
insured have the right to financial compensation as a
percentage of the invalidity pension to which they
were entitled. There are also several measures of
vocational rehabilitation for persons who don't get any
rights for invalidity through pension system and being
unemployed.
Disability status is defined as decreased working Disabled persons are also viewed as so-called
capacity of a person, the result of long-term disadvantaged job-seekers.
unfavorable health conditions. The decrease of These groups need, in addition to standard active
working capacity is expressed in percentage points, in labour market policy measures, special assistance in
line with detailed structure. An insured is disabled, if accordance with their specific needs, and subsequent
he/she has reduced ability to perform gainful activities support of their access to the use of standard
by more than 40% due to long-term health condition. employment services.
Disability pension is awarded to an insured person There are three tools to support job creation for
who meets condition of minimum pension insurance: disabled persons: state contribution for establishing
up to 22 years (age of the insured person) at least 1 and maintaining of sheltered workshop, contribution
year, over 22 to 24 years – at least 2 years, over 24 to for operating or performing self-employment to
26 years at least 3 years, over 26 to 28 years at least 4 disabled citizens and contribution for activities of the
assistant at work.
years and up to 28 years – at least 5 years.
In the earnings-related pension scheme an invalidity Rehabilitation measures are taken into consideration
pension may be awarded to a person aged 18-62 who first: to improve the employees’ ability to cope with
has an illness which reduces the person’s work ability their work, to facilitate their return to work, to promote
37
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Schemes and eligibility
and whose incapacity for work is expected to last for at
least a year. The daily sickness allowance is payable
for a maximum of 300 days. After 60 days an
assessment of rehabilitation possibilities shall be made.
Another factor: the person’s possibilities of earning a
living. In the public sector it suffices that the employee
has become incapable of doing his/her own job due to
illness, handicap or injury.
From the beginning of 2004 the assessment of the
entitlement to invalidity pension for a person who has
reached the age of 60 and who has a long work history
has emphasised especially the occupational nature of
the incapacity for work. In the national pension scheme
the invalidity pension may be granted to persons aged
16-64. An invalidity pension is changed to an old-age
pension from the age of 63.
The invalidity pension may be awarded as full (lost
capacity at least 3/5) or partial (capacity reduced by
2/5-3/5) pension. The partial invalidity pension is
designed for an employee who is still so fit for work
that he/she can do part-time work or other lighter tasks
(although not required) and the amount is half of the
full disability pension.
If an individual's work capacity is determined to be
reduced for an extended period of time, he or she could
be granted disability benefits. It is only when
rehabilitation efforts have been exhausted or it has
been deemed that the individuals’ illness is such that
sufficient work capacity is not present that disability
insurance benefits be awarded. Disability benefits can
be awarded permanently or temporary (1-3 years),
always awarded temporary for persons between the
ages of 19-29.
Disability insurance benefits consist of both protection
according to the loss of income principle in the form of
income-related sickness compensation or activity
compensation and basic protection in the form of
guaranteed compensation. The latter is payable to those
without or with a low income related sickness or
activity compensation, either full, or as a top-up to
reach the minimum guaranteed level. Depending on the
degree of disability, disability benefits can be full or
partial. It is possible to receive a 25%, 50% or 75%
benefit.
Entitlement for Incapacity benefit (IB) is based on a
person’s National Insurance contributions and is paid
when a medical condition or disability prevents them
from working. Disabled persons without national
insurance contributions can claim Income Support and
Disability Premium (a means-tested benefit). Disabled
people can also be credited with National Insurance
which helps protect future entitlement to benefits such
as state retirement pension.
There are two tests: the Own Occupation Test
(applicable for the first 28 weeks of incapacity
provided the person has been engaged in paid work for
at least 8 out of the last 21 weeks before the onset of
incapacity) and the Personal Capability Assessment
(PCA). The PCA assesses a person’s incapacity under
38
Rehabilitation measures
their general social functional ability and their capacity
to manage on their own. There are three types- of
rehabilitation, i.e. medical, vocational and social
rehabilitation.
If a person cannot continue working even by means of
rehabilitation or assistance, he/she may be entitled to
an invalidity pension. As the invalidity pension is only
granted when the invalidity is permanent, no regular
reviews are made.
Individuals who have been granted sickness
compensation should be entitled to test their capacity
for work 3 months with compensation and 21 months
more without losing their compensation right.
In May 2007, legislation came into force giving
agreement to a new Employment and Support
Allowance (comprising contributory and noncontributory benefits plus severe disablement
allowances), simplifying the existing benefits' system
for those whose health affects their capacity for work.
From 2008, the new system will consider what an
individual is capable of, and what help they need to
manage their condition and return to work. For that
also the PCA will be transformed. Individuals with
health conditions will be given support and
employment advice to enable them to return to work
where possible.
A focus is put on early intervention, with increased
support to employers and employees in managing
MS
Schemes and eligibility
14 specified activities in the area of physical and
sensory function and/or four specified mental health
conditions. The PCA incorporates medical advice to
the benefit Decision-Maker in relation to the incapacity
test. An OECD report published in 2003 recognised
the current PCA as being one of the toughest in the
world.
Although most (about 80-90%) people expect to get
back to work, a very large number never do. After two
years on incapacity benefits, a person is more likely to
die or retire than to find a new job.
Rehabilitation measures
health in the workplace; improved absence and return
to work management; and increased support to health
professionals to enable them to provide holistic
treatment plans which recognizes the benefits of work
with respect to rehabilitation and long-term health.
More customer contact and more employment advice
and support for individuals with health conditions to
enable them to realize their ambition to return to work,
building upon evidence from the successful Pathways
to Work pilots.
Source: National replies to the SPC questionnaire.
2.5.
Survivors' benefits: Compatibility of benefit receipt with employment
This section analysis the role of survivors' benefits in the early labour market exits. Survivors'
benefits are awarded depending on the country to the spouse and/or children of the deceased
(sometimes the circle being larger) and the right to receive benefits sometimes also depending
on the age or employment status of the beneficiary.
Survivor pension are not necessarily paths of early exit from the labour market. They are
linked to the professional activity of another person (the spouse) and therefore often granted
to persons who have never worked.
Coverage varies a lot among Member States though systematically it is essentially focused on
women. In some Member States, it is lower or close to a percentage point (EE, ES, LV, PT
and UK) probably reflecting more restrictive eligibility conditions (for instance in comparison
with other benefits, like minimum income benefits for older people) or even zero in absence
of survivors benefits (DK). In other Member States, coverage lies generally between 3 to 7
percentage points (see table below), except in the case of SK (7.1% for 55-59 and 13.1% for
60-64).
Table 8 – Take up of survivors' benefits in EU27
Low
(<2%)
Medium
(Between 2% and
5%)
BE, CY, DE, FI, IE,
LT, NL, PL,
High
(≥5%)
DK, EE, ES, HU,
BG, FR, MT, SK
LV, PT, SE, UK
BE, DE, FI, IE, LT,
DK, EE, ES, LV,
BG, CY, FR, HU
Take up as a share of population 60-64
MT, NL, PL, SK
PT, SE, UK
Note: These figures are generally taken from administrative sources are not necessarily completely comparable.
Member States for which information is not provided do not have such information available. Source: National
replies to the SPC questionnaire. Figures generally refer to 2006.
Take up as a share of population 55-59
They can nevertheless also be granted to persons who have worked or are working. In this
respect it is relevant to focus on conditions that allow combining survivors' benefits with
earnings from work, as survivors’ benefits can discourage labour market participation if they
cannot be combined with earned income. Actually, the impact of such restrictions on the
overall employment rate may not be very strong, depending on how many people of working
age actually receive survivors’ benefits that would be a sufficient regular income.
Countries that rely mainly on individual entitlements rather than derived benefits (e.g. DK,
EE and SE) and countries where there are no restrictions on the combination of survivors’
benefits and earned income (BG, CZ, ES, IE, NL, PT and the UK or when eligibility is
39
foreseen only above retirement age HU – except for short term benefits) are least likely to
discourage the labour market participation of survivors.
In a number of Member States there are, however, either ceilings on the combined income
from work and survivors’ benefits (e.g. BE, FR, AT, MT, RO, FI ; in SI it is not possible to
combine at all any employment and survivors pensions), or reductions in the survivors’
benefit by a percentage of earnings exceeding a certain limit. Such reductions are applied in
DE (40%), IT, EL and LU.
Table 9 – Design of survivors' benefits
MS
BE
BG
CZ
DK
DE
EE
Survivors' benefits
Employed and self-employed worker persons are granted a survivors pension on the basis of age -the
surviving spouse has to have reached 45. This condition is not necessary when the surviving spouse has a
dependent child or if the child is affected by a permanent disability of work of 66% at least or the widow was
married to a miner with a work history of 20 years. Rules are more generous for public servants.
The surviving spouse can cumulate the full amount of survivor pension even whilst working. The following
pensions may not be received simultaneously: a personal pension for old age and period of insurance with a
survivor pension for old age and period of insurance; a personal or a survivor pension for old age and period
of insurance with a personal or survivor general-sickness invalidity pension; a personal general-sickness
invalidity pension with a survivor general-sickness invalidity pension.
The surviving spouse shall be entitled to a survivor pension five years earlier than the standard retirement age
or before that age if he or she has lost his or her working capacity.
There is no link between survivors' benefits and employment status in pension system. A widow/er is entitled
to widow/er pension for 1 year after the death of her/his husband if the deceased was: the recipient of old age
pension, full/partial disability pension; or met the condition of having insurance period for entitlement to full
disability or old age or; s/he died as the result of an occupational injury. The payment of widow/er's pension
after 1 year can be restored if the recipient: cares for a dependant child; takes care of long-term severely
incapacitated child requiring special care; takes care of severely incapacitated parent; is fully disabled; has
attained the age 55/58 or retirement age (in case the retirement age is lower).
There are no survivor’s benefits.
A surviving spouse is entitled to the ‘grand’ widow's or widower's pension if she/he has reached the age of
45 or has reduced earning capacity or is bringing up a child who is under the age of 18 (there is no age limit
when the child is disabled and unable to earn his or her own living). This pension is 55% of the deceased
spouse's pension entitlement. Otherwise, surviving spouses are entitled to the ‘small’ widow's or widower's
pension for a maximum of 24 months. This pension is 25% of the deceased spouse's pension. Dependents
who have raised children receive a supplement.
Part of the recipient's own earned income, wage replacement benefits and income from investment will be
counted against her/his surviving dependent's pension. If this income exceeds a specified monthly limit, the
widow's or widower's pension will be cut by 40% of the amount in excess of the limit.
Notwithstanding these provisions, the old legislation continues to be operative for couples who married
before 2002 if at least one spouse was born before 1962 or if one spouse died before 2002. According to the
old legislation, the ‘grand’ widow's or widower's pension is 60% of the deceased spouse's pension
entitlement. No supplements are paid for periods spent bringing up children. The ‘small’ widow's or
widower's pension is paid for an unlimited period of time. Income from investment is not being taken into
consideration. For persons who have lost one parent, the orphan's pension is 10% of the pension their
deceased parent would have drawn, plus an orphan's pension supplement 20%.
Family members who have the right to receive a survivor’s pension are:
- a provider’s child, brother, sister or grandchild who is under 18 years of age (or who is under 24 years of
age and is a student enrolled in daytime or full-time study), or who is older permanently incapacitated for
work before he or she attained 18 years of age. A brother, sister or grandchild has the right to receive a
pension if he or she does not have parents with capacity for work;
- a provider’s parent who is of pensionable age or permanently incapacitated for work;
- a provider’s non-working widow who is pregnant (from the twelfth week of pregnancy);
- a provider’s widow or widower who is permanently incapacitated for work or of pensionable age and whose
marriage to the provider had a duration of at least one year;
- a provider’s divorced spouse who attained pensionable age or was declared permanently incapacitated for
work before the divorce, or within three years after the divorce and whose marriage to the provider had a
duration of at least twenty-five years;
- a parent or guardian of a provider’s child who is not employed and is raising the provider’s child who is
40
EL
ES
FR
IE
IT
CY
LV
under 3 years of age in his or her family.
Survivor's pension shall not be paid to persons who are employed (except to children under 18 years of age,
or to students under 24 years of age enrolled in daytime study or, for medical reasons, in another form of
study, or full-time study).
In the case an insured or a pensioner (of main or supplementary pension) of a social security organization
within the competence of the Ministry of Employment and Social Protection dies, the surviving spouse (man
or woman) is entitled, under certain prerequisites, to a part of the deceased’s pension. In such cases the
amount of the pension (full or reduced) paid to the surviving spouse depends on whether s/he works or
receives a pension by any social security organization.
If the beneficiary of the survivor’s pension works or receives a pension, the amount of the survivors’ pension
is reduced by 50% until the beneficiary becomes 65 years old; after this age there is no reduction (that is the
beneficiary receives the 70% of the pension the deceased spouse would be entitled to receive).
When a survivors’ pension is not paid in full to the surviving spouse, due care is taken to avoid that the
family suffers a potential income loss, when there are children among the deceased’s beneficiaries. Thus, the
amount by which the survivor’s pension is reduced is equally allocated to the dependent children.
Widows pension are paid if the deceased has worked for 500 days in the 5 previous years. The amount is
based on the earnings in the two previous years and is 52 % of the pension (70 % when there are
dependants). If the deceased was a pensioner, the amount is based on the same regulating basis that served to
calculate the pension of the deceased.
Widow's pension is compatible with any earned income and with a retirement pension or incapacity benefit.
There are proposals for reform of the system which reflect women's greater role in the labour market.
In the private sector: survivor's pensions in the basic scheme are paid from 51 years in 2007 (age conditions
should disappear as from 2011). The combination of a paid activity with a basic survivor's pension is possible
up to certain earnings limits (for a single person 1433 €). From 55 years, to encourage continuation in the
labour market there are greater incentives. Survivor's pension in obligatory supplementary schemes are
provided from 55 or 60 years old, without condition of resources: the combination of a complementary
survivor's pension with a paid activity is possible without limits, but because of the applicable age conditions,
the complementary survivor's pension recipients are more often inactive;
In the public sector, the civil service schemes do not include either condition of age, or condition of resources
and the combination is therefore possible of paid activity and a survivor's pension provided by this scheme
Survivor benefits are flat-rate payments which are not based on previous earnings. There are three schemes,
the Widow’s and Widower’s (Contributory) Pension, the Widow’s and Widower’s (Non-Contributory)
Pension and the One-Parent Family Payment.
The maximum rate of payment for the contributory scheme for a person under 66 years of age is €191.30 per
week with an allowance of €22 per week for each dependent child. The two non-contributory schemes pay a
maximum of €185.80 with €22 each per week for dependent children. The contributory pension is a social
insurance based payment, qualification for which can be based on the insurance record of either the surviving
or the deceased spouse. Payment is not dependent on age or the presence of dependent children in the
household and continues in payment as long as the surviving spouse does not remarry or cohabit. A recipient
is free to engage in employment without impacting on their pension entitlement. Some 26,000 people aged
under 65 were in receipt of this pension in 2005.
Widows or widowers who do not have an adequate social insurance record to qualify for a contributory
payment and who do not have dependent children may qualify for the Widow’s and Widower’s (NonContributory) Pension. This is a means tested payment, and so any additional income from employment can
impact on entitlements. That said, earnings of €100 per week are disregarded when means are being
assessed. At the end of 2005 numbers receiving this payment accounted for about 12% of those receiving
widows and widowers payments.
Some 87% of those receiving widows’ and widowers’ benefits are receiving a contributory payment. These
payments are employment neutral as income derived from employment has no impact on eligibility for a
payment or the level of benefit received. Means tested payments play a relatively small role in the support
system in place for widows and widowers
Survivors’ pensions are reduced in three steps of 25%, 40% or 50% depending on other income, above a
certain ceiling.
Widow’s pension is independent of income, age or employment status of the beneficiary. However
Widower’s pension is payable to the widower of an insured woman, only if he is permanently incapable of
self-support and was permanently maintained by his wife before her death.
The following persons are entitled to receive survivor’s pension, when the deceased person was socially
insured: children of the deceased person; family members incapable of work, brothers, sisters, grandchildren,
they have become disabled before reaching the age of 18, Stepsons and stepdaughters, if they have not
received from their parents alimony. Above mentioned persons older than 18 have the right to this pension if
41
LT
LU
HU
MT
NL
AT
PL
they are full time students and are not older than 24.
The amount of survivor’s pension for the family members of the deceased provider may not be less than 65%
of the State social security benefit, and it shall be calculated from the providers prospective old-age pension
in the following amounts: 1) for one child – 50 % of the pension; 2) for two children – 75 % of the pension;
and 3) for three or more children – 90 % of the pension.
Survivors (surviving spouse) who are assessed as disabled or of the age of old age pension have a right to get
state social insurance survivor's pension if a deceased spouse was entitled to state social insurance old age or
a disability pension. Since 1 January 2003 widows (widowers) and children of the deceased person were paid
survivor's pensions until children become non-dependant. Since January 1, 2007 mothers rising children of
the deceased will not be eligible for survivors’ pension on behalf of orphans.
From January 2007 the spouse (disabled or of retirement age) is entitled for a fixed (basic €20) amount of
survivor's pension and the orphan (under 18 years of age, or under 24 years of age if student enrolled in
daytime study) is entitled to 50% of pension of the deceased (calculated as disability pension). Survivor’s
pension can be granted for people of both working and retirement age. There is no link between receipt of
survivors' benefits and employment status or total income received.
When the combined income from survivors' pensions and earnings exceeds a threshold corresponding to a
reference amount (€1 369 in 2003) increased by 50%, the survivor's pension is reduced by 30% of the earned
income. However, earned income up to an amount corresponding to 2/3 of the reference amount is not taken
into account. Moreover, if the survivor's pension is lower than the threshold, the difference between the
survivor's pension and the threshold is subtracted from the earnings used in the calculation of the reduction.
The threshold is increased by 4% for every child for which "baby years" or an education allowance can be
claimed or by 12% for every child claiming an orphan's pension.
Eligibility conditions for widow’s pension and parental pension is based on the eligibility of the deceased and
survivors can receive pension if they -due to their age - are presumably not engaged in a gainful activity most
commonly when the widow is above retirement age. Eligibility is fulfilled in active age as well if the widow
is disabled, or takes care of at least two children.
Eligibility to temporary widow’s pension is also fulfilled regardless of the former conditions, for one year
after the spouse’s death, the amount is 60% of the spouse’s benefit, regardless to being engaged in gainful
activity. In the payment procedure of survivor’s benefits the age of the recipient is an important factor.
Orphan’s allowance is provided up to age 16 of the children or up to age 25 if he/she is a full-time student.
Parental pension is paid to those parents who are disabled or aged 65 years or more, dependant upon their
child throughout the preceding year, and whose deceased child was entitled to old-age, invalidity or work
accident-related disability pension at time of death
The link existing between survivors’ benefits and employment status is that if the survivor is employed, the
earned income from such an employment activity must not exceed the minimum wage for the survivor to
keep his/her entitlement to a Survivor’s Pension. On the other hand, in the case of survivors who have
children under 21 years of age who still follow full-time education, the entitlement for their pension is not
forfeited, regardless of income.
The survivors’ benefit based on the National Survivors Law (Algemene Nabestaanden Wet - ANW) is at most
70% of the minimum wage. The amount of the benefit is influenced by the income of the surviving relative.
Income from labour is not deducted (wages, profit, early exit benefit, early pension and non-statutory
supplementary payments by the former employer), but income related to labour is completely deducted
(social insurance benefits, like those based on the unemployment or disability schemes). Private capital,
income from capital and privately insured supplementary survivors’ pensions are not deducted from the
survivors’ benefit. A foreign statutory survivors’ benefit is deducted completely.
Furthermore, the entitlement to a private survivors’ pension is not linked to the employment status and/or the
age of the recipient. Former spouses or former registered partners may be eligible for a survivors’ pension
when their former partner dies if, as a consequence of this, they no longer receive alimony. When the
recipient of the survivors pension reaches the age of 65 they are eligible for an old age pension, based on the
General Old Age Pensions Act (Algemene Ouderdomswet – AOW).
Survivors benefit ranges between 0% and 60% of the pension income from the deceased partner. If the
survivors` benefit and the income from employment (or a pension of his/her own) is above a certain ceiling,
this benefit will be reduced.
A widow and a widower is entitled to a survivors’ pension if: at the moment of her husband’s (wife’s) death
they were 50, incapable of work (or become so within 5 years of the bereavement) or were bringing up at
least one of the children, grandchildren or siblings entitled to the survivors’ pension. Moreover a bereaved
spouse not meeting the conditions of the entitlement to survivors’ pension is entitled to a periodic survivors’
pension: for a period of one year after her husband’s (wife’s) death; for the period of participation in
organised training in order to obtain qualifications necessary to perform paid work, no longer however than
for the period of 2 years after her husband’s death.
42
PT
RO
SI
SK
FI
SE
The survivors’ pension amounts to: for one eligible person - 85% of the benefit which would be paid to the
deceased person; for two eligible persons - 90% of the benefit which would be paid to the deceased person;
for three or more eligible persons - 95% of the benefit which would be paid to the deceased person. The
husband’s benefit are calculated in the old system’s rules. The higher survivors’ pension than old age pension
calculated in the new system’s rules encouraged widows and widowers to early exist from the labour market.
There is a link between receipt of survivors' benefits and the age of the recipient concerning how long the
pension will be paid to spouses and former spouses for 5 years, if they are under 35 years of age at the
deceased’s date of death or for unlimited duration if at the date of death they are 35 years old or reach that
age while pension entitlement lasts or are totally and permanently disabled for any kind of work.
Beneficiaries of survivor pension may receive a pension along with income from a professional activity, if
the gross monthly income is not higher than one quarter of the average gross wage. The children and the
surviving spouse shall be entitled to a survivors' pension, if the deceased was a pensioner, or he satisfied the
terms for obtaining a pension. The children shall be entitled to successor pension: until the age of 16; if they
continue to study in a legally-organised education institution until graduation, but without exceeding the age
of 26; for the entire period of the disability regardless of the disability classification.
The surviving spouse shall be entitled to successor pension for the rest of his/her life, on reaching the
standard pension age, if the couple had been married for at least 15 years. If married for less than 15, but
minimum 10 years, the pension shall be reduced by 0.5% for each month less. The surviving spouse shall be
entitled to survivors' pension, regardless of age, during the disability periods classified as 1st or 2nd degree,
if the couple had been married for at least 1 year.
The surviving spouse who does not meet the conditions mentioned above) shall benefit from survivors'
pension for a 6 month-period from the date of death, if during that period he/she does not earn monthly
incomes which come from professional activities for which insurance is mandatory, or if these incomes are
less than one quarter the average gross wage on the economy.
The survivor pension beneficiaries shall attend medical expert examinations, medical re-examinations, and
shall have the obligation to attend the rehabilitation programmes according to the same regulations provided
for disability pension
A widow(er) of a deceased can claim widow(er)'s pension under general conditions if: at the time of death of
the insured person from whom the right derives, he/she had reached 53 years of age; at the time of death of
the insured person, he/she was completely incapacitated for work, or; if he/she became so within one year of
the death of the insured person, or; at the time of death of the insured person, he/she was left with one or
more children with the right to family pension from the deceased insured person.
By law it is impossible to receive a salary and pension simultaneously. The individual is either a pensioner or
a worker. A pension recipient who re-enters employment or who has been elected or appointed for a public or
any other function, or who commences to engage in an activity on the basis of which he is insured, will
acquire the status of an insured person and shall not receive the pension during this period. If a person has
acquired at the same time the right to an old-age or invalidity pension and the right to a widow(er) pension
they have the right to choose which of these pensions they receive.
Recipients of widows' and widowers' benefit are mainly persons in retirement age (or shortly before reaching
retirement age).
An earnings-related survivor’s pension is part of the earning-related pension scheme and the accident
insurance and occupational disease system. The survivor’s pension may be paid after the death of the primary
beneficiary to the surviving spouse, the children or the deceased person’s former spouse. A survivor’s
pension may be granted to the surviving spouse, if the spouses had married before the deceased reached the
age of 65 and if the surviving spouse has or has had a child together with the deceased. If the spouses do not
have a child together, the requirement is that the spouses had married before the deceased reached the age of
50, the marriage had lasted for at least five years and at the death of the spouse the surviving spouse had
reached the age of 50. In the earnings-related pension scheme the pension may also be granted to a surviving
spouse aged less than 50, if the surviving spouse had received an invalidity pension continuously for at least
three years before the death of the spouse. The child is entitled to a survivor’s pension, if he/she at the death
of the deceased is aged less than 18 or 18-20 if he/she is a full-time student or participates in vocational
training. Can be granted to the deceased person’s former spouse or the divorced party to a registered
relationship, if the deceased person was at the time of death liable to pay alimony.
The national survivor’s pension is means-tested. A person who has been granted the national survivor’s
pension who begins to receive a disability, unemployment, individual early retirement or early old-age
pension from the national pension scheme, or a similar foreign benefit, cannot at the same time receive
national survivor’s pension.
The widow’s pension was abolished in 1990, although it may still be granted on certain conditions to
surviving women born in 1944 or earlier in accordance with rather extensive transitional regulation. Instead
an adjustment pension available to all surviving spouses, regardless of sex was introduced. There is also a
43
guarantee pension up to the age of 65 which is reduced by the widow’s pension. Thereafter, the surviving
spouse receives benefits from the old-age retirement system. Certain supplementary widow’s pensions can
also be received if the surviving spouse has parental responsibilities. These can also only be received up to
the age of 65.
Women born in 1945 or later are entitled firstly to the adjustment pension and a guarantee pension in relation
to the adjustment pension for a period of twelve months. The adjustment pension can be received by
surviving spouses (regardless of sex) for a duration of twelve months. In certain cases, often for families with
young children the pension can be paid out for an extended period but latest up until the age of 65. Earned
pension rights are directly linked to the deceased’s income.
All survivor’s benefits in Sweden are calculated against the pensionable income of the deceased spouse.
They are not reduced by the work income of the surviving spouse. Since the new adjustment pension is given
for a shorter period of time it is usually not a catalyst in the early exit from the labour market for surviving
spouses. The widower’s pension could give incentives to retire early for those women who may have a low
work income of their own, for example those that work part time. Most women who today can receive the
widow’s pension are however close to the age of 65 which is in many ways the normal retirement age in
Sweden.
Great Britain has three pre-pension survivor benefits the:
UK
- Bereavement Payment - a one off lump sum payment of £2,000 paid as long as the deceased made
sufficient contributions in any one tax year;
- Bereavement Allowance - a weekly allowance for survivors over 45 years who do not have children which
is paid for one year; and
- Widowed Parent's Allowance - a weekly allowance for surviving parents which is paid until the survivor
ceases to be entitled to Child Benefit for the youngest child (Child Benefit is paid until the child ceases full
time non-advanced education which can be between the ages of 16 and 20).
All of the benefits are paid to survivors both in and out of work and regardless of their income.
Entitlement for Bereavement Allowance and Widowed parent's Allowance is based on the National Insurance
contributions that the deceased spouse/civil partner made during their working lives and any credits that they
received whilst in receipt of benefits. The number of contributions required to receive the full amount of the
benefit is adjusted for the impact of a foreshortened working life and to take account of periods spent caring
for children or sick and disabled adults. In cases where the deceased did not have sufficient contributions for
the full amount of the benefit a reduced amount is paid on a pro rata basis as long as 25% of the required
contributions were paid or credited
Source: National replies to the SPC questionnaire.
2.6.
Private pensions
The section discusses the role of benefits from the private pension schemes in the decision
making for take-up of premature retirement. Terms 'supplementary pensions' as well as
'private pensions' in the section refer to occupational pension schemes, either mandatory or
voluntary by nature. Statutory funded pension part of social security schemes, where a share
of social contributions is diverted into individual accounts are excluded from the scope of the
study.
Coverage of supplementary pensions among 55-64 is generally low. Measuring the coverage
correctly though is a complicated task as only a few Member States have information in this
area. In SE the take-up of private pension benefits is below 5% in the age bracket 55-59 and
between 5% and 15% in the age bracket 60-64, depending on earnings levels (the share with
private pension benefits as the dominating income source declines with income and increases
with age but is generally below 50%). In UK, the take-up is about 11% in the age bracket 5559 and 29% in the age bracket 60-64.
Although the aim of supplementary private pension provision is to provide additional income
in old age (supplementing statutory pension) they can also contribute to additional early
labour market exits in several Member States (for the purpose of this study, private pensions
refer only to supplementary funded pension provisions that are linked to employment status,
thus being mandatory or voluntary occupational pensions).
44
In a few Member States, early exits through supplementary private pensions used to be a
common practice, though it is now diminishing or stopped (BE, UK). In NL and FI, there are
specific private pension schemes designed to provide early retirement (premiums in NL
became no longer tax deductible for those younger than 55 from 1st January 2005), but in
most other Member States supplementary pensions cannot be used for bridging (DK, EE, PL,
BG, CZ and CY). While bridging is possible in some other Member States (FR, IE, SI, SK,
SE) but not extensively used.
In SE, occupational pensions represent a significant source of income and can, in some cases,
enable early exits. For people with incomes exceeding the qualifying ceiling in the public
pension system, most occupational pensions are DB schemes, which can provide an incentive
to retire early. Indeed, the design of these DB schemes makes it disadvantageous to reduce the
number of hours worked before retiring, as the benefit is based on wages in the last few years
of employment. Then when it is difficult to carry on working full-time, this design can make
it more financially advantageous to stop all work completely. In HU, although voluntary
pension fund savings are most frequently withdrawn at the time of acquiring eligibility for
statutory pension, they could play an increasing role in providing income replacement for
periods spent out of work prior to fulfilling standard retirement conditions in the future.
Nevertheless, in Sweden, most of the large occupational pensions have been renegotiated into
predominately DC schemes (this change applies primarily to new entrants and the transitional
rules are extensive).
The early take-up of private pension benefits depends strongly on eligibility rules and age
limits. In some cases, a lower age is fixed by law (BG, DK, PL, FI), but this that can be as
low as 50 in UK, IE and CZ. In some others, tax incentives are applied (BE, FR, LV, HU). In
HU tax incentives must be paid back in the case of voluntary pension funds (in the mandatory
private pension scheme, early retirement is possible only in line with the retirement rules of
the statutory scheme pillar). It is interesting to note that in some Member States, private
pension benefits are actuarially reduced in case of early withdrawal (IE, UK, SE).
Some Member States consider the frequent use of private pensions to bridge between early
exit and statutory retirement age attributable to low awareness of the consequences of such
behaviour. For instance, in the UK, employees are often even unaware of actuarial reductions
of pension in the case of early labour market exit.
Table 10 - Private pensions and early exits
MS
BE
BG
CZ
DK
DE
Arrangements of private pensions allowing early retirement
Until 2003 there was no legal limitation regarding the age to which complementary pensions could be paid
and this possibility was often used. Complementary pensions can be paid only from 60, payments before that
age can be carried out until 2010. The 2005 "solidarity pact between the generations" provided for an
advantageous tax rate (10% instead of 16.5%) in order to encourage the employed persons to benefit from
their pension complementary only to the normal legal retirement age (65 years). An optional complementary
pension scheme for the self-employed was set not allowing to obtain the complementary pension before 60.
The private schemes in the voluntary funded pillar (occupational and personal) allow early retirement after
reaching 60 years in the occupational schemes and 5 years earlier than standard retirement age in the personal
schemes. Pensions from these schemes can be cumulated with a limited number of benefits from the public
insurance: unemployment benefits and invalidity pension.
Schemes introduced in 1994, allowing to withdraw the old age pension from 50 years after 3-5 years of
contributing till 1999. "New" pension plans allow withdrawing of pension from 60 years (or from the
retirement age - if it is lower) after 5 years of contributing.
Private pension arrangements typically allow retirement at the age of 60 years, not earlier (statutory
pensionable age for public old age pension is 65).
In principle, any form of savings, including private pension arrangements, can be used to finance an
individual's early retirement. However, in light of the political target to safeguard retirement income, this is
not desirable. An extensive set of instruments have been created to foster supplementary private pension
45
EE
EL
ES
FR
IE
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
provisions aiming at ensuring that people are able to maintain their standard of living in old age.
Not applicable – occupational schemes do not exist.
NA - Not disclosed
Benefits from occupational and personal pension pillars can only be withdrawn after the right for the pension
benefit from the statutory pension pillar, thus they do not play a role in promoting early exits.
Regarding company schemes and personal insurance, there are no directly binding rules as regards retirement
age. However, there is a strong indirect incentive because of tax and social advantages granted to the
contributions and to the benefits which refer on the whole to the age and to conditions of taking a full rate
pension.
At scheme's discretion – early retirement is possible with reduced pensions. The minimum age at which a
person can receive a pension is normally age 50. However occasionally full pension is paid early for
restructuring purposes.
Retirement before normal retirement age is usually subject to the consent of the employer and/or the trustees.
The Revenue Commissioners will permit a pension to be paid at any age if it is due to ill-health. Otherwise,
the minimum age at which a person can receive a pension is normally age 50. A member who retires in
advance of normal pension age could expect a reduction in pension benefits and these reductions can be quite
large if the period from the date of retirement to normal pension age is long.
Not applicable
There is no general rule regarding early retirement in Occupational pension schemes. Where an occupational
scheme has provisions for early retirement these are independent from other social. Early Retirement scheme
for the Government and Semi-Government Employees: An employee who is 45+ and has completed at least
5 years of service, receives a lump sum while his pension benefits remain dormant until he reaches the age of
55. In the case where the employee is no longer able to work due to physical or mental illness he may be
granted pension before reaching 55. There are also special rules for lawyers and doctors.
Regarding Provident funds law stipulates that besides retirement, the benefits from the provident fund are
paid in the following cases: termination of employment (voluntary or not); permanent incapacity for work;
death of the member.
The private voluntary pension scheme participant can receive all accumulated pension capital from the age of
55 or continue participating and receive capital in parts. Reduced income tax and social insurance
contributions are applied.
There are no occupational pensions provided yet, although there is a possibility provided in the law to claim
the occupational pension 5 years prior to legal retirement age.
Not applicable
In the case of voluntary private pension funds, the accumulation can be taken out after a 10 year long
membership period even before reaching standard retirement age. However, payout before retirement age is
exempt from taxation only after 20 years of membership. Money withdrawn between the two dates is taxed
with a rate on a diminishing scale. If the member gets disabled within the ten year period with at least 50%
reduction in working capacity, he/she can transfer money to a voluntary mutual assistance fund. In the case
of pension savings accounts, the accumulation can be withdrawn at any time. However, payout before
retirement age incurs tax obligation on investment returns and tax relieves already taken must be paid back
with a 20% penalty.
Not applicable
There are different schemes of early retirement that can also be capital based pension related schemes,
recently premiums are no longer tax deductible for those younger than 55 from 1st January 2005.
Currently there are about 20 occupational and supra-plant pension funds in Austria administering total funds
of € 10 billion. The private old age provision is considered as an option to fill gaps in coverage under the 1st
and 2nd pillar with a view to maintaining a person's living standard. Traditionally, life insurance is playing a
major role. Concrete arrangements for private pension plans are made by the individual.
Under Employee pension program (voluntary component of the pension system) decumulation is possible
since the age of 60 or acquiring retirement eligibility and reaching the age of 55.
Individual Pension Account (IKE) refers to an additional, voluntary component of the pension system.
Decumulation is possible under similar conditions, but also in the case of heritage.
NA
Schemes to be implemented in 2008.
An insured person may acquire a right to early supplementary old-age pension, when a pension scheme of his
membership provides for such an option.
To retire from funded pension scheme before reaching the state pension age, a person must have a record of
ten-year savings period (currently under revision) and the accumulated assets must be sufficient for a lifelong annuity worth at least 0.6-times the amount of the subsistence minimum.
46
The occupational pension is either a complementing occupational pension in money or it is intended to lower
the retirement age. The insurance policy may also involve a combination of the two. In group pension
insurance the lowest possible retirement age entitling to tax deductions for the contributions is 55 years
(when the company pays the contributions). If the employee himself contributes - 60 years.
In collective agreements there is a contracted age of retirement of 65, although one can retire from the age of
SE
61 or even 55. In the case of early retirement, the monthly pension is reduced in that disbursement of the
pension benefit reaches over a longer period. Early retirement pension can only be drawn as a full pension
with the exception of the agreement for local government employees. Certain parts of the pension benefits
may be drawn as a temporary pension, for example from 60-65.
There used to be a lot of early retirement through private pensions, which is reducing now but still high. It is
UK
possible in most occupational or personal pension schemes to draw pension before the Normal Retirement
Age set by the pension scheme rules. Currently, an occupational or personal pension can be drawn from age
50, and is usually actuarially reduced to compensate for the scheme paying out for a longer period. By 2010,
however, the earliest age for early drawdown of a personal or occupational pension scheme will rise to the
age of 55. Many pension schemes also allow various kinds of voluntary early retirement by members. In the
public sector, almost all schemes offer benefits on voluntary early retirement. Among open private sector
occupational schemes, 76% of DB and 71%of DC schemes made provision for members wishing to retire
early.
Source: National replies to the SPC questionnaire.
FI
2.7.
Taxation and social contributions
Tax treatment of different benefits can make a big difference to individual benefits and thus
influences the decision and path out of the labour market.
In most Member States (like CZ, EE, EL, IE, LU, PL, PT, RO, and SI) there are no specific
favourable measures to promote early exit through fiscal rules. In NL the favourable taxation
measures have recently been abolished and are only relevant for people older than 55 years
since 1st January 2005. In most Member States pensions' taxation differs from the taxation of
other income and pension benefits are often taxed favourably, but early exits are not enjoying
a favourable regime (like BE, FI and FR where various early exit benefits have different
taxation rules, notably stronger for private pensions). Furthermore, employers do not
generally need to pay pension contributions on behalf of older workers who are already
eligible for a pension; in addition the level of other social contribution may be lowered.
Many Member States have introduced fiscal and other measures to promote deferred exit
from the labour market or employment of certain groups of people. In DK, where there is a
legal early retirement option from a private scheme, pension deferral is promoted by the
increasing tax-free lump sums for every period of longer stay in the labour market. Similarly
in NL contributions into early exit pension schemes have not been tax deductible since 2005.
Member States have also developed incentives to encourage employers to keep or hire older
workers or disabled workers. The financing of social benefits through contributions represents
a major element of labour costs. Exempting older workers and their employers from such
contributions can therefore constitute a strong employment incentive, but this could also
distort conditions on the labour market in favour of older workers.
A majority of Member States have measures in place that reduce the cost of employing older
workers (like in BE, BG, LT, AT, RO, SI, SE). Reductions in labour costs are generally
available to all older workers, though they can be sometimes specifically targeted at the
recruitment of older unemployed workers or specific contracts (FR, HU, PT, SI) or disabled
workers (see section 2.4). For instance, in SE since 2007, several tax incentives are offered to
employ beneficiaries of early exit benefits. Member States appear not to be concerned about
possible distortions on the labour market as a result of reduced labour costs of older workers.
Such measures may therefore constitute a useful, albeit expensive, complement to other active
47
ageing measures and facilitate the return to higher labour force participation of people in their
50s and 60s.
Table 11 - Taxation and early exits
MS
BE
BG
CZ
DK
DE
EE
EL
ES
FR
Taxation and early exits benefits
Pensions, unemployment benefits, sickness or disability benefits benefit from an advantageous tax treatment.
A reduction of EUR 1,749.55 is granted when the net income is composed exclusively of pensions or of other
replacement incomes and it is reduced proportionally when other revenues are received. Complementary
pensions as well benefit from an advantageous tax treatment: premiums are in theory taxable at the rate of
4.4 %. However, this tax is not due if this involves social pension plans which fulfill the conditions imposed
by law. Income tax encourages the payment of annuities.
Pensions and replacement incomes undergo certain levies to finance social security systems: on the total
amount of the conventional early retirement benefit the worker pays a 3.5% to pensions and 3% to
unemployment. A contribution of 3.55% on pensions is intended for financing sickness and disability
insurance. A second contribution from 0.5 to 2% according to the total amount of pensions is carried out
from statutory and complementary pensions. A contribution of 3.5% is paid on allowances of disability to the
profit of pensions. An employers' contribution of 8.86 % is paid on all payments carried out by employers
providing their personnel extra legal advantages as regards retirement.
Reductions of employers' contributions - Employers who employ over 50-year-olds pay reduced employers'
Social Security contributions. This reduction increases gradually with the worker's age until age 65.
There is tax relief for the insurance with a supplementary voluntary pension fund: personal contributions are
deductible from the income before taxation. Tax relief for Persons with Reduced Working Capacity: the total
sum of the annual taxable income for any person with 50 % or less working capacity is debited with the
double amount of the annual tax threshold.
For each job created and filled by unemployed women over 50 years of age and men over 55 years of age,
who are hired upon referral by the Employment Agency, the employer is provided monetary support towards
salary costs, additional payments made for longer careers and payments for leave. The Employment agency
also pays most work based benefits, e.g. pension contributions, health and sickness etc.
No specific measures
The voluntary early retirement pay scheme is flexible and contains different arrangements to keep
participants active in the labour force. Participants who have decided to keep working for another 2 years
after having reached early retirement age will receive a higher benefit (typically 100 % instead of 91% of the
maximum unemployment benefit) and be able to earn tax-free premiums that are paid as lump sums at
normal pension age. Participants who have regained the right to early retirement pay according to a certain
cooling-off/escape clause will have their retirement pay reduced by 4 % for each lacking year’s payment of
contributions.
No tax incentive systems as regards early retirement. Funded pension systems - both private and occupational
– are promoted through tax concessions and direct grants. These state-subsidised pensions are not payable
before the age of 60 or earlier than the statutory old-age pension.
The contribution payments that an employer makes to avoid a reduction in the individual's pension in the
event of retirement before reaching official retirement age can receive preferential tax treatment.
No specific measures
All pensions (early or not) are subject to income taxation, following the general taxing system, which does
not distinguish between income from work and pension income.
There are no specific tax advantages due to early exit from the labour market. The tax advantages are
associated either with the fact to receive an absolute permanent incapacity, or the fact of being 65 +. For
pensioners with a low amount of pension, no tax deductions in advance every month are applied.
Unemployment benefits and CATS early retirement allowances are subject to the CSG (Contribution sociale
Généralisée) at a reduced rate of 6.2% and to the CRDS (Contribution to the repayment of the social debt) at
a standard rate of 0.5%. Other public early retirement allowances are subject to a contribution of sickness
insurance at the rate of 1.7%, to the CSG at a reduced rate of 6.6% and to the standard CRDS. Invalidity and
survivor pensions are subject to the CSG at the reduced rate of 6.6% and standard 0.5% of CRDS. Lastly,
benefits received under the RMI and the AAH are not taxable, nor are they subject to the CSG or to the
CRDS. Occupational early pensions are subject to a wage contribution of sickness insurance of 1.7% or 1%,
to the CSG at a reduced rate of 6.6% and to the CRDS.
The 2003 reform introduced a specific contribution on occupational early pensions paid by employers with a
maximum rate of 24.15%. From October 2007 this rate increased to 50% and all public and private early
retirement benefits are subject to the CSG rate for wages (7.5%).
48
MS
IE
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
Taxation and early exits benefits
Contract on initiative employment (CIE) offers employers financial aid for a proportion of the cost of the
contract and, if necessary, of training and accompanying professional activities. This financial aid cannot
exceed 47% of the gross minimum wage SMIC (within the limit of a weekly 35-hour). The Contract de
professionalisation is a flexible employment contract for which companies benefit from several advantages
(in particular exemptions from a part of the employers' contributions).
No specific measures
NA
There are no fiscal advantages or other public arrangements supporting early exits; all benefits from
Provident Funds as well as the Widow’s Benefit from the Social Insurance Fund are not taxable.
There is a non-taxable minimum of 1980 LVL per year, the rest is taxed.
There are not any fiscal advantages supporting of early exits. Pensions and benefits are not subject to
taxation.
Subsidies for employers employing those over 50 can be spent only for salary of the supported persons.
There is no general reduction of social insurance contribution or taxes for those who hire older people.
No specific measures
There is no special tax treatment due to early exit from the labour market.
In Malta pensions are taxed similarly to wages.
In 2005 the ‘Law adjusting fiscal arrangements on early pension and introduction of the lifecycle model’ was
introduced, discouraging early exits: contributions for early retirement schemes are no longer tax deductible.
Furthermore, employers are given a financial incentive when employing older WW-recipients in the form of
reduced social insurance contributions.
No unemployment insurance contribution for employers (employers share: 3% of the gross wage) in case of
hiring persons older than 56. Bonus-Malus-system: Means no unemployment insurance contribution for
employers when hiring persons older than 50. Employers have to accept penalties in case of firing persons
older than 50, who work for more than 10 years in the company.
No specific measures
There are financial incentives for employers to hire long term unemployed workers offering them a
permanent contract, provided that employers have are increasing their workforce. Employers may claim
temporary exemption from payment of contributions for a maximum period of 36 months.
The Public Employment Service implements 2 special measures for older unemployed (those over 45):
1) Employers who offer permanent contracts pay no contributions to the unemployment budget for 1 year.
Plus, they receive an amount equal to the minimum gross basic wage with an obligation to continue the
employment contract for at least 2 years.
2) The employers hiring, individuals, who within 3 years from the employment date, satisfy the conditions to
request an early partial pension or to receive the compulsory pension, (if they do not satisfy the conditions to
request an early partial pension), shall benefit monthly, for the period of employment, until the date when
such conditions are satisfied, from an amount equal to the minimum gross basic wage.
Employers, who employ workers older than 50 years, that have been unemployed for longer than 12 months,
are entitled to partial exemption to taxes and contributions for 1 year.
Incentives for employing older workers are included in the programme “Stimulating the new employment of
elderly”, established in 2006 whereby employers, employing unemployed workers, older than 50 years of age
are entitled to a subsidy to the amount of 50% of the worker’s wage.
Since August 2006 persons receiving early pension benefits are not subject to unemployment, disability and
sickness insurance contributions. However, contributions to voluntary pension schemes (which allow for
earlier withdrawal) are tax deductible.
Statutory pensions are taxed as earned income (progressive tax rate) with the deductions applying for smaller
pensions; the taxation regime is of EET type. Tax treatment of supplementary pensions arranged by the
employer is the same as that of statutory pensions. Self-acquired voluntary pensions are taxed in the capital
income taxation regime with a flat tax rate of 28%, and pension contributions can also be deducted to a
certain amount from taxation within the capital income taxation regime.
There are no fiscal advantages or other public arrangements supporting of early exits. Vice versa the current
government has introduced measures to support the labour activity, especially for those above the age of 65.
In order to increase incentives to work, a tax reduction on work income was introduced, especially for lower
incomes. For persons above the age of 65 years, the reduction is higher than for other groups, in order to give
the elderly extra incentives to work longer. The new government has abolished the 'special payroll tax' for
employees over the age of 65 - the only social contribution paid for them is the employer contribution to the
public pension system amounting to 10.21% of gross wage.
On January 1 2007 New start jobs were introduced that offer employers the possibility to employ people who
49
MS
Taxation and early exits benefits
have been receiving unemployment benefit, sickness benefit, disability pension or social allowance for more
than a year with completely waived employers' contributions. The subsidy to older workers, over 55 years of
age, taking a new start job, will be given for a period equivalent to twice the period that an individual has
been absent from working life, up to a maximum of 10 years.
From the 6th April 2006 the rules relating to Pension Schemes and Plans have changed, sweeping away the
UK
eight existing tax frameworks that had evolved over the previous twenty years, and replaced them with one
set of rules to govern all plans with the intention of making them easier to understand.
Benefits can be taken between age 50 and 75 (the lower age limit changing to 55 from 2010), forming the
Tax Free Cash and Income. In addition, tax-free cash could be taken, payable from all vested plans (present
and future), at the rate of 25% of the fund value up to a maximum of 25% of the Lifetime Allowance. A fixed
income can be taken from a vested pension as lifetime annuity or by a scheme pension. Alternatively a
flexible income can be taken from a Pension Drawdown plan, at a rate up to a maximum of 120% of the level
set by the Government Actuaries Department.
Source: National replies to the SPC questionnaire.
2.8.
Links between benefits and possibilities to combine with earnings from work
In many Member States it is possible to combine earned income with the receipt of early exit
benefits. However in these circumstances there is often a reduction in the level of the benefit
or, a change in the interaction with the tax or social security payment systems. For example
LU allows the combination of early retirement benefits and earned income providing earnings
do not exceed a certain threshold.
Several Member States allow the combination of disability benefits, or disability pensions
with income from earned work. In a number of Member States this is combined with limits on
the level of earnings or corresponding reductions in the level of benefits.
Member States report different methods for managing the combination of benefits and earned
income, often using earnings thresholds or benefit reductions to ensure that the social
objectives of the social protection benefits are achieved without resulting in high benefit /
wage combinations, whilst still supporting a parallel objective of increasing labour market
participation. Most Member States have taken a softer attitude on the issue of combining
pensions with earned income once an individual has passed the nominated retirement age,
reflecting an acknowledgement that whilst early retirement should not be encouraged by the
benefit system in many instances, pensions taken at normal retirement age should be seen as a
right, which ought not to be undermined if an individual continues to work.
Table 12 - Possibilities to combine benefits with earnings from work
MS
BE
BG
CZ
DK
DE
EE
EL
ES
In certain circumstances it is possible to combine various benefits with earned income.
Earned income and pensions received in circumstances of early retirement are permissible.
Generally there is no restriction in receiving pension and earning with the only exception of receiving early
retirement pensions and continuing to earn up to retirement
Individuals are entitled to work in the early retirement period, but employment causes a reduction in the
payment of retirement benefits. Participants who have fulfilled the 2-year rule can earn tax-free premiums if
they continue to work.
The unemployment fund can allow an individual to start or continue working as a self-employed person
whilst receiving retirement benefits. Participants are entitled to work in the flexi-benefit period, but the
working hours are deducted from the flexi-benefits.
People in receipt of a Disability pension may also work and earn income though with reductions to their
benefit.
No information
No information
No information
The Spanish pension System, allows the possibility for those in receipt of permanent invalidity benefits to
50
FR
IE
IT
CY
LV
LT
LU
HU
MT
NL
AT
earn income. Those in receipt of unemployment benefit in specific circumstances (part-time work in
companies of less than 10 workers) may also be allowed to work, in which case the employer pays part of the
unemployment benefit.
No information
If a member leaves a scheme on normal early retirement grounds (i.e. not ill- health) there is no prohibition
on him earning an income from another source/employment. If he is drawing a number of early retirement
pensions, or accrues more pension benefits from the new employment, the combined benefits will be subject
to certain conditions.
No information
Benefits from the schemes related to early exits can be combined with earned income without limitations
except in the case of 100% invalidity where the loss of earnings capacity is 100%. However when a person
is entitled to partial invalidity pension from the Social Insurance Fund he/she is allowed to earn income,
which is proportional to the extent of his ability to earn income.
An insured person, who has concurrent rights to several different types of statutory pensions, shall be granted
the largest of them in terms of amount.
In majority of schemes accumulation with earnings from work and other kind of benefits is allowed.
Employed disability, survivors’ pensioners may receive a non-reduced pension independent of either the
pension amount or their salary amount. Pensions of officials and military servicemen are also paid in case its
recipient is working or has insured income.
The beneficiary of an early old age pension may only carry out periodically remunerated paid work, if the
monthly average income does not exceed one third of the minimum social income. The beneficiary of a
disability pension may also carry out periodically remunerated paid work insofar these incomes, together
with the pension, do not exceed a ceiling fixed at the average of the five highest wages and treatments over
the career.
Until the end of 2007 early exit from the labour market could be combined with earned income without
limitation; however from 1 January 2008 an earnings threshold is introduced if the pensioner has not reached
62 years of age: if s/he earns more income in a specific year than 12 times the monthly minimum wage, the
benefit will be ceased.
In the budget of 2008 a measure was announced whereby a person reaching pension age will be entitled to
receive his/her social security pension irrespective of whether he/she has retired from a gainful occupation
and irrespective of the income from such an occupation.
It is possible to receive a WW-, IOAW- or Wet WIA-benefit in combination with earned income. To
stimulate participation in the labour market, part of this income is discounted in the calculation of the benefit.
But when earned income reaches the same level as before the moment the benefits became due, the right to
these benefits ceases.
Work and receiving an invalidity pension are possible, but if the monthly income is higher than a certain
ceiling the invalidity pension will be reduced. The same is true for early retirement due to long insurance
duration, corridor-pension, early retirement due to hard working conditions during the night.
There is a possibility to combine partial and full disability benefits with employment. However, in such case
the disability benefits can be reduced or suspended depending on the level of the wage.
No information
PT
The following categories may cumulate the pension with incomes earned from professional activities,
RO
regardless of the level of such incomes: the visually impaired; compulsory pensioners; 3rd degree disability
pensioners. The beneficiaries of successor pension may cumulate the pension with the incomes earned from
professional activities, if the monthly gross incomes earned do not exceed one fourth of average monthly
gross wage on the economy.
No information
SI
Since January 2004, all beneficiaries (receiving old age pensions, early pensions, disability pensions and
SK
survivor pensions) can perform a gainful activity without having imposed a cap on their benefits.
No information
FI
It s not possible to receive unemployment benefits and receive earned income, however, there is the
SE
possibility to be part-time unemployed and work part-time.
Invalidity pension: Other than the possibility to be part-time on a sickness or invalidity benefit and work parttime there are also other possibilities of combining such benefits and work-income. A person who is a
recipient of full sickness or activity allowance has the right to work income that does not exceed one-eighth
of the normal income or full-time work time. Such an income does not affect the right to full sickness or
activity allowance.
No information
UK
Source: National replies to the SPC questionnaire.
PL
51
3.
TRENDS AT PLAY AND PLANNED REFORMS
3.1.
Recent reforms aim at reducing the current high level of take up of early exit
benefits
Early retirement benefits are a key element in the path out of the labour market as they are
taken up often by around 20% of the population aged 55-64. Their adaptation, by reducing the
take-up (or its length) of various early exits benefits before they take up a statutory pension
can help to promote longer working lives.
As documented in former sections, most Member States have engaged a number of reforms to
adapt these schemes in recent years:
•
Reforms of special early retirement benefits (section 2.2) are taking place in AT
(2000, 2003, 2007), BE (2008), ES (2007), IE (2007), LV (2008), PT (2007), FI
(2005). Some of the reforms aim in particular at ensuring that employers bear all or at
least a significant share of the costs, and at finding an appropriate manner to
compensate for particularly demanding or hazardous jobs. In some other Member
States, eligibility rules are tightened or schemes closed. An important dimension in
the reforms is ameliorating working conditions so that the nature of the job is be less
harmful to workers' health.
•
Reforms of unemployment benefits (section 2.3) for older workers are taking place in
BG (2007), CZ (1993), DK (2007), DE (2003), LT (2005), HU (2005), NL (2006), FI
(2003), UK (2000). These reforms aim in particular at reducing the differences
between eligibility conditions for older workers and those for the whole active
population and at developing active measures in order to enhance labour market
opportunities for older workers.
•
Reforms of invalidity benefits (section 2.4) are taking place in AT (2000, 2003, 2008),
ES (2007), LU (2002), PL (2006), HU (2008), LT (2005, 2006), PT (2007), MT
(2007), NL (2005), FI (2004) and UK (2007). These reforms aim in particular at
offering better possibilities to combine benefits and work, retraining, improving
adaptation of enterprises, including of workplaces. Also incentives are strengthened
both for employers to employ the people with reduced capacity for work, while
incentives for beneficiaries could also be reviewed to reduce barriers to returning to
working life. The prevention of invalidity and professional rehabilitation of people
with health problems can also make an important contribution and it has to start from
an early age.
•
Reforms of supplementary pension benefits (section 2.6) are taking place in a few
Member States to diminish or even stop early take-up of supplementary pension
benefits, by tightening eligibility rules and increasing awareness of the consequences
of early exit on future benefit levels, BE (2003) and UK (2010).
•
Reforms of taxation (section 2.7) are taking place in BE (2005), FR (2003, 2007), HU
(2007), NL (2005), PT (2007) or SE (2007). These reforms aim at increasing
incentives for employees to postpone or avoid taking early exit benefits as well as
increasing incentives for employers to hire older workers.
These reforms clearly aim at reducing the take-up of early exit benefits, notably by restricting
eligibility conditions, increasing incentives to work longer and enhancing work opportunities
for older workers in general and some categories of beneficiaries as well.
52
Nevertheless, given the current high levels of take up of these benefits (section 2.1) more
steps will probably need to be taken in most Member States in order to access scheme design
and possibilities for adaptation in order to reduce the length of the period between end of last
job and the take-up of statutory pension.
About half of Member States have plans for additional steps in reforms related to the early
exit schemes from the labour market:
• In some cases (LV, RO, UK) reform decisions have already been taken, but the
implementation process is under way.
For example in LV until mid-2008 it will still be possible to apply for a premature pension,
after which date the option will be closed. In RO as well retirement age and eligibility
criteria are being raised, the rehabilitation system revised and a system introduced
crediting non-contributory periods. In UK there are changes planned to the invalidity
benefits regime to increase support for claimants to return to work and in addition to
introduce, and from 2008, the new Employment and Support Allowance, under which new
claimants will need to participate in work-focused interviews and engage in work-related
activity.
• Some MSs (BE, HU) have already prepared additional steps in reforms in detail,
which will probably soon be ready to implement.
BE is planning extensive reforms in the sector of vocational rehabilitation introducing
inter alia measures stimulating the reintegration into the working life of the disabled. This
would supplement the current gradual limitation of early retirement options by increasing
the age of access to various schemes. Similar changes are planed by HU aiming at
introducing new incentives to the rehabilitation scheme as well as limiting access to
advanced pension by increasing the number of contribution years for eligibility from 38 to
40 in 2009 and 41 service years in 2013. Other changes are also planed as regards special
hazardous professions or rehabilitation annuities.
• Other Member States are considering options for further changes (AT, EE, DK, EL,
FR, NL, SI, SK, SE) to improve the design of early exit schemes, which still can be in the
early stages of political debate.
Reforming special pension schemes has been a subject for discussions in EE during the
last few years, but no decision has been taken on the ways to reform the present system.
EL has launched a consultation to reform the social security system which will submit
proposals by the end of 2007. Current discussions on developments in the disability
pension field in DK could lead to reforms in the future, following the adoption of a report
by the Government in May 2007. FR sees that the implementation of measures of the
national action plan for the employment of the seniors should continue and be
supplemented soon by additional provisions such as encouragement for the extension of
activity and discouraging companies from providing early retirement schemes. In the NL,
there are no explicit plans except as concerns the life-course scheme for redirecting early
retirement to part-time retirement. In SI a working group is of formulating changes in
order to increase incentives to remain in work longer and to raise the effective retirement
age. In SK as well discussion is open on how to limit early exits, notably by reconsidering
eligibility criteria for early retirement. SE focuses the debate on further reforms of disability
and sickness schemes, but there are no concrete plans as yet on further amendments.
53
3.2.
Expected evolutions
3.2.1.
Recent trends of take-up
In recent years, the trend in take-up of early exit benefits has generally been negative. Most
Member States reported that figures declined, especially regarding early retirement (DE, FR,
HU), unemployment (ES, FR, PL, UK) or disability benefit (DE, DK, LU, NL, PL, UK).
Conversely, increases have been registered in a few Member States in recent years: as regards
early retirement (BE, RO), unemployment (LU) or disability benefits (EE, LT and SE).
Table 13 – Recent trends in coverage
MS
BE
Trend
(+/-/=)
+
DK
-
DE
-
EE
+
ES
-
FR
(early retirement
and
unemployment)
+
(disability)
IE
=
LV
=
LT
+
LU
=
HU
-
Specific developments
The number of early pensions (prépensions) has been in regression since 1992 but set out again
rising since 2003 and in 2006 experienced an increase of 1.9%. This is related to the major
industrial restructurings that Belgium acknowledged in recent years. The government changed
the eligibility conditions with the solidarity pact between generations.
Invalidity benefits declined in age group 60-66 remarkably from 2001-2006, in other age
groups this remains quite stable.
The number of persons opting for early retirement has dropped significantly in recent years. The
number of beneficiaries of Vorruhestandsgeld has been divided by 3 since 1995 (11.000 in
2006) while the total number of employees in subsidised or unsubsidised partial retirement
(Altersteilzeit) has sharply increased in recent years (403 000 in 2006 against 24000 in 1997).
Most importantly, this is due to the retirement age shift to 65 combined with the introduction of
pension reductions in case of earlier retirement.
During the two last years (2005-2006) the number of people receiving the incapacity pension
has increased by around 15% (3500 persons).
Compared to the peak of unemployment in 2000, the number and percentage of over 50-year-old
unemployed persons have decreased more than twice. Unemployment among 50–54-year-olds
decreased the fastest. The gap between the unemployment rates among men and women has also
declined though the percentage of unemployed men has constantly been higher than for women.
The number of public early retirement beneficiaries was divided by two between 2000 and 2006.
The share of unemployed receiving unemployment benefits aged 50 to 64 (under the insurance
and solidarity schemes) has decreased from 2005 due to labour market the improvement, after
slightly increases since the 2000s (but, in the age bracket 55-59 the increase continues). RMI
beneficiaries are in slow and steady increase in the age groups 50-59, which is partially
explained by demographics. The Senior plan is expected to contribute to reverse these trends.
Invalidity pensions and AAH have slightly and continuously increased in recent years, it is
however partially explained by arrival in the corresponding age groups of more numerous
generations of the "boom-baby".
From 1997-2005 there has been a moderate growing trend of disability pensions, although in
2006 number droped (that was only caused by a change in law as recipients are switched to
State Pension (Contributory) on reaching their 66th birthday).
In last four years –since 2003- the rate of unemployed persons in pre-retirement age in the total
number of registered unemployed persons had reduced insignificantly – only by 1.1%.
As regards disability, the number of beneficiaries in the age bracket 50-69 increased by about
20% between 2002 and 2005. Following the 2005 reform the increase of male beneficiaries (5069) has stopped and that of female has slightly increased by 5.2% between 2005 and 2007.
The number of survivors’ pension recipients is still growing due to the fact that such pensions
were introduced only since 1995. But numbers of survivors’ pension recipients of under
retirement age will shrink due to the 2007 reform.
Increase in take up of unemployment benefits of about 1 pp of population 55-64 since 2000.
Decrease in recent years of disability beneficiaries which are essentially men in permanent
disability benefits.
Formerly in the 1990s final exit of older workers from the labour market was the widespread
practice through early retirement options and disability pension. The participation of persons
above 50 years of age is now increasing. The number of beneficiaries of early pension benefit
(based on tripartite agreement and financed by employer) were divided by four between 1991
54
MS
Trend
(+/-/=)
Specific developments
and 2002 and even declined significantly to almost one seventh by 2006 (6,1 thousand). Most of
the beneficiaries are in the age bracket 55-59 (93%).
In addition to health status, employment difficulties do also play a significant role in the high
number of invalidity pensions. 57% of claimants are below standard retirement age – this is
mainly due to the raising of the retirement age combined with the people who escaped
joblessness by retiring in the early 1990s.
After 1997, another form became a significant early pension option: advanced pension.
In 2005 94% of newly retirees retired earlier, before standard retirement age, 82% of all old age
pensioners was advanced old age retirement pensioners. Besides advanced pension disability
pension is the most common way to retire earlier.
In 2006, the number of voluntary private pension fund members who started withdrawing their
accumulation was almost 20 thousand (0.4% of active population 15-74), most of them in the
age bracket 55-59. Prior to 2003, the number of withdrawals was much more modest, because
the 10 year long membership set as a condition for eligibility had not been reached.
=
Since 2000 take up of unemployment benefits is stable among 55-59 (around 3%) and declines
NL
among 60-64 (from 6 to 3 %). From 2001-2006, the take up of disability pensions for 55-64
declined of about 1 pp for women and 5 pp for men (% of population).
Since 2000, slight decline of take up of unemployment benefits among 55-59 (around 3.5%)
PL
and among 60-64 (from 2 to 1 %). On the period 1995-2005, the take up of disability pensions
declined of 7 pp (% of population) for 55-59 and 3 pp for 60-64.
+
In the period 2001-2006, there has been an increase of early retirement in the years 2001-2002
RO
and more gradually the following years.
Since 2000, the number of beneficiaries of disability pensions has slightly declined (-2%) and
FI
that of unemployment pension even a bit more (-13%).
+
Almost 3p.p. (% of labour force) total increase from 1993-2006, increase higher among women
SE
(4.5 p.p.).
As regards unemployment benefits, the numbers and proportions have declined over the last ten
UK
years, for those over 50s as well as in the 25 to 49 age group. Women over 60 and men over 65
are not eligible for JSA (potentially receiving State Pension). Pension Credit and automatic
state pension contributions are available to jobseekers aged over 60s, contributing to the
relatively small proportion of men over 60 who are claiming Jobseekers Allowance. Survey
evidence suggests that there are probably fewer than 10,000 PC claimants who are ILO
unemployed (end 2006, there are about 230,000 over 50s who were ILO unemployed).
The proportions of older men claiming incapacity related benefit (IB) have fallen substantially
in recent years, after a decline in flows in the mid-1990s. This has been particularly visible in
the declining proportion of 60 to 64 year old men claiming IB.
The absence of a Member State from the table indicates the fact there was no information on recent trends in
coverage available on it.
Source: National replies to the SPC questionnaire.
3.2.2.
Expected trends of take-up
In most Member States a general decline in the take-up of benefits allowing early exits is
expected in the future (BE, DK, DE, FR, LU, NL, HU, AT, PL and FI), while take-up levels
are expected to remain at current levels in SE and increase in IE, LT (due to the maturation of
disability schemes) and RO. These expected trends can result from different driving forces:
recent reforms, demographic factors, maturation of schemes. Clearly positive developments in
the labour market will also have a strong influence on future take up of benefits as underlined
by CZ, HU or PL. In HU where significant progress has occurred in employment rates (7.8
p.p.) in the 4 last years for the age group 55-59, it is observed that the inflow into early
pension or disability schemes is strongly affected by labour market conditions (and also by
region).
Two major factors are currently having contradicting effects: the raising of the retirement age
and the restricting possibilities of early retirement, like in CZ. Nonetheless, recently enacted
55
reforms are expected to induce declines in take up of benefits in a number of Member States
(like in AT, DE).
Regarding specific types of benefits, in link with recent reforms, the expected future take up
of early retirement benefits is expected to decline in BE, DK, LT and PL. Future declines can
also be expected as less and less workers are expected to meet conditions of long career at
early ages, like in LU. A decline in take up of disability benefits is expected in some Member
States, mainly driven by the effect of recent reforms (like in LU). The expected future take up
of survivors' benefits is mainly driven by structural trends: the combined effect of increased
life expectancy for men and increased participation in employment of women is expected to
lead to significant declines in the future (like in BE).
While most Member States expect declines in take-up in future decades, reforms are expected
to change behaviour gradually and in the long term. But it is noticeable that evaluations of
already enacted reforms do not seem very developed 4 . For instance, no Member State
mentioned expected future take up of unemployment specific benefits. Indeed most Member
States either do not mention any assessment of future trends (BG, EE, EL, ES, IT, CY, LV,
MT, NL, PT, UK) or provide only very general ones. Evaluation –possibly regular- would
contribute to more transparency and would inform any possible additional steps.
Table 14 – Expected future trends
MS
BE
Trend
(+/-/=)
-
Description of trends
In the medium term, the early exit rate for the 50-64 population is expected to decrease from 23.0% in
2005 to 20.4% in 2015 (20.0% in 2050). The decrease should be more pronounced for men than for
women, mainly as a consequence of the increased participation of women in the labour market. The
1997 pension reform also contributes to this reduction: it raises (by one year every three years) the
standard age of retirement from 60 (before 1997) to 65 in 2009. Simultaneously the entitlement to
other social benefits (and early exit benefits) is extended until the standard age of retirement.
By scheme, the overall decline is driven by :
- the reduction of the survivors' pensions (due to the increase of life expectancy and the increased
participation of women in the labour market) and
- the reduction of the number of old age unemployed exempt from job search requirements (called old
age unemployed hereafter). The reduction of old age unemployment is linked to the hypothesis of a
progressive reduction of the long term unemployment rate (including the old age unemployed). In the
short run, the 2002 reform of the scheme also contributes to this reduction.
- As far as the early retirement scheme is concerned, the evolution is different for men and women.
The reform enacted in the so-called Solidarity Pact between generations raises the standard age of
early retirement from 58 to 60 years and extends the length of the career required to access the system.
This reform reduces the male standard early retirement rate. For women, the effect of their increased
participation in the labour market more than compensates the effect of the scheme reform.
- Besides, the invalidity rate increases over the same period. Its growing importance mainly reflects
increased female labour market participation.
On the whole, the early retirement rate is expected to decrease. Alternatives to early retirement
(combining unemployment benefit with a complement paid by the employer) are now discouraged
with large social security contributions and early retirement is accessible to workers only after they
exhausted without results all the means to find employment elsewhere. As from 2008, the conditions
for granting early retirement will be stricter, with a gradual increase in seniority and age conditions.
These measures and of other incentives for older workers employment (pension bonuses for employed
workers from 62 to 65 years of age, employers' contribution reductions, etc.) are expected to induce in
the long term an adaptation of behaviors. However, these adaptations will be done gradually - the
committee of study on ageing stipulates that the new rules of granting of the early retirements will
have an impact on the increase in the employment rate of the 55-64-year until 2035.
CZ
4
Na
Two major factors are currently having contradicting effects: the raising of the statutory retirement age
Conclusion based on replies to questionnaire for the current SPC study.
56
DK
-
DE
-
FR
-
IE
+
LT
+
LU
-
HU
-
AT
-
PL
-
RO
+
SK
Na
and the possibilities of early retirement. This led to stagnant real retirement age in recent years (men
60.2, women 56.3 in 2005) in spite of the rising statutory retirement age.
It is difficult to forecast how the take-up of early pensions will develop. From the actuarial point of
view, the motivation to take up an early/deferred pension is neutral for people around retirement age.
The other source of “pressure” is the labour market.
The welfare reform - adopted in the course of 2006 and spring 2007 should reduce take up of early
retirement and public pension schemes.
The number of persons opting for early retirement has dropped significantly in recent years. Most
importantly, this is due to the retirement age shift to 65 combined with the introduction of pension
reductions in case of earlier retirement. Since the increase in retirement age to 65 and increased
incentives to work longer have not yet been completely phased in, the number of persons who retire
early can be expected to further decline in the coming years. In addition, the statutory retirement age
will continue to be raised to 67 years by the year 2029. In the long term, this will also lead to an
additional decline in the number of new early retirees.
The number of ASFNE beneficiaries should continue to decline. The CATS scheme seems to have
reached its maturity and should not develop more. The CAATAmiante mechanism should, in constant
legislation, reach its maximum beneficiaries around 2010.
The public policy developed for several years aims at making the number of in receipt decrease
appreciably, by restricting access to all public and private mechanisms and by encouraging recruiting
or maintenance in the old employees' employment. This policy, which requires a real evolution of
behaviors and of practices on the part of the employees as well as employers, can therefore only have
an effect very gradually.
It is projected that numbers in receipt of Invalidity Pensions would nearly double by 2061, reflecting
an increase in the size of the labour force and increasing social insurance coverage that is partly due to
reforms, but essentially linked to the trend of increasing female participation in insurable employment.
The take up of disability pensions is projected to slowly rise, mostly due to increasing life expectancy.
Lengths of service pensions are no longer awarded (established until 1995) and therefore will drop
gradually. The numbers in receipt of Compensations for Extraordinary Working Conditions are still
growing as new eligible persons who have worked in extraordinary working conditions for a period
established by law until 1995 are coming to receive the benefits, but in approximately 15 years that
scheme will be closed.
The measures enacted under the new law on partial disability in 2002 should be a sustainable increase
of the participation rate of partially disabled people in the future. Withdrawal from the labour market
via the mechanism of the early retirement at age 57 (with as condition 40 years of compulsory periods)
will be less and less applicable in the future because of the increased completeness of the careers,
(especially for women, migrants and cross-border commuters), and the delayed start of professional
activity due to extended schooling periods.
In the future the number and rate of early retirement benefits is expected decrease in the middle and
the long run – in line with rules tightening early retirement option. At present, 12% of all old-age
beneficiaries are below standard retirement age. Since the regulation on early retirement will be
tightened from 2009, the number of early retirees is expected to fall. Projections of the Ministry of
Finance show a gradual reduction: with the already enacted changes in regulation, this ratio might go
down to about 7-8% by 2020.
Due to the increase of the retirement age step by step to 65 (women: 60) by 2017, we expect a
declining number of early retirees.
From 1st January 2008 of the numbers in receipt of early pension generally will be phased out. So it is
expected that the numbers in receipt of early exit benefits initially will increase (due to the last-year
effect), afterwards from 2009 the number should start to decrease. ‘Bridging arrangements’ for some
professions and change the formula of disability pension. Moreover these benefits will be correlated
with new formula of old –age pensions. As a result the level of benefits will depend on length of
contribution period and early retirement will be less profitable. We already observe a reduction of
early retirement beneficiaries in 2006, which is related to the improvement in the labour market
situation and thus reduced pressure to move to early retirement.
In the period 2001-2006, we notice an increase of early retirement in the years 2001-2002, and the
following years this number gradually increased more gradually. It is foreseen that the measures of
prolonging the active life will slow down the number of early retirement pensions, still increasing.
People will probably continue to use the possibility to retire earlier, although the current government
foresees further tightening of the eligibility criteria. Nevertheless, it is expected that the share of new
pensioners who will retire earlier (i.e. before reaching statutory pension age) should not exceed 16 %
by 2010.
57
-
According to the latest research, the frequency of retirement among persons aged 63-65 has decreased.
At the same time employment among persons in these age groups has increased.
=
Primarily disability pensions are used as a labour market exit route by people over 50. It is almost
SE
inevitably that this factor, will lead to a lower labour force participation in the 55-64 age bracket in the
future. But overall, unchanged labour force participation amongst those aged 55-64 for the next 10
years or so is expected.
The absence of a Member State from the table indicates the fact there was no information on expected future
trends available on it. Source: National replies to the SPC questionnaire.
FI
3.2.3.
Employment behaviour (transition from work to inactivity and pension)
Projecting evolutions in the employment behaviour of the elderly triggered by reforms is a
complex task, as this depends on a number of variables. The difficulty of the task is
acknowledged by Member States, and only a few have provided data on how recent or future
trends are affected by recent reforms.
In spite of recent reforms, some Member States foresee difficulties in reaching the Lisbon
targets. For instance, in BE it is projected that in 2050 the employment rate of the 55-64 age
group would still be under the 50 % target (according to national projections 47.1 % and
AWG projections 49.5 %), while the average exit age is expected to increase by 2.9 years
(compared to 2005) to reach 60.7 by 2050. PL and RO see difficulties linked to low incentives
to postpone retirement, but at the same time expect activity rates to increase. In RO the
employment rate has decreased by 5.6 p.p. since 1999 and prospects are not seen very
positively unless substantial changes are implemented providing incentives for employers to
hire and retain workers aged 45 or older.
In several Member States, positive changes are expected from the recent changes of early
exits (BE, IE, NL, EE, SI, SK, AT, FI). In the NL a raise of exit age is expected by 2 years
from 2000 to 2020, notably following the reform of disability pensions. In LT, an increase in
overall rates is expected, especially under the assumption that specific measures for civil
servants are abolished.
Table 15 - Likely impacts of reforms on employment behaviour
MS
BE
CZ
DE
EE
FR
IE
Likely impacts of reforms on employment
In 2005, the employment rate of the 55-64-year-olds was 34% and it is increasing. It should show a marked
progress of more than 10 p.p. over the next decades, mainly driven by increased female labour market
participation, a reduction of the unemployment rate and the intergenerational solidarity pact. However, even
in 2050, it will still be under the 50 %, both in the SGA projection (47.1 %) and in the AWG projection
(49.5 %). According to the 2007 SGA projection, the average expected age of retirement will increase from
58.3 years in 2005 to 60.7 years in 2050. The progress is more pronounced according to the AWG
projection which predicts a rise from 57.8 years in 2005 to 60.7 years in 2050.
The employment rate within the age group 55 – 64 years has been growing permanently (with the only two
exceptions) since the early 90´s. In the period between 2000 and 2006 the employment rate increased
significantly by nearly 9 percentage points (from 36 to 45 %). The employment rate of the elderly is
estimated to grow also in coming years, primarily due to the continuation in the process of gradual
increasing of the retirement ages.
Labour force participation has increased significantly for older workers, rising to 49.9% in the fourth quarter
of 2006.
In 2006, the employment rate of the elderly amounted to 58.2 %. In addition to the increase in the retirement
age, the high employment rate of the elderly is influenced also by low pensions, which give rise to the desire
to work longer and earn extra income. The employment rate of elderly men has increased only 1.8 p.p. from
1995 to 2006 and has even decreased in absolute terms, but the employment rate of women has been
increasing rapidly. Actually in 2006, the percentage of employed elderly women at 59 even exceeds the one
of men.
The employment rate of the elderly is estimated to grow also in coming years. It can be presumed that the
age of leaving the labour market will also rise, although no estimations have been made.
An increase of employment rate of older workers is expected.
Following the phasing out of the PRETA scheme (no new applications being accepted from 4th July 2007),
58
LV
LT
LU
HU
NL
AT
PL
RO
SI
an increase in male participation at age 55 from 77% at present to 88% by 2061 is projected, while female
participation at age 55 is projected to rise from 54% to 66% by 2061.
Employment rate in the age group 55-64 is increasing rapidly, from 36% in 2000 to 53% in 2006.
The employment rates within the age group 55-59 and 60-64 are very different (67% and 31%). Within the
50-64 age brackets, the employment rate has slightly increased due to the extension of the retirement age.
As an important measure cancellation of specific working conditions for persons of over 65 years of age in
the Labour Code and the laws regulating civil service are necessary in order to guarantee prolongations of
working lives.
The average exit age is expected to increase from 57 years in 2005 up to 60 years in 2050.
Activity and employment rates of older generations are currently partly due to demographic changes and the
2006 rules on increasing age of retirement. The employment rate of 55-59 has increased by 7.8 p.p. in the
last 4 years. By 2010, the labour market participation among 55-59 is expected to increase further. The
inflow into early pension or disability schemed are strongly affected by labour market conditions. A model
studied the interactive effects of ages and unemployment rates by local areas:5 the probability that a man
was pensioner five years before standard retirement age in average 37%, this indicator was 18% in the best
and 56% in the worst micro-region.
At present, the mean take-up age of pension is about 57.5 for women and 60.3 for men. This average age is
expected to rise by about 3 years for women by 2013 and stay more or less constant in the case of men (a
temporary little fall-back might happen between 2009 and 2013).
Recent evidence indicates 6 that in case of unchanged employment rates by age and gender the general
employment rate will drop by 1.7 p.p. in 2005-2020 as a result of the ageing of the potential labour force.
However, a rise in the general labour participation is expected (as percentage of the population aged 20 to
64 years) from 72% in 2005 to 75.5% in 2020. More than half of this participation effect would stem from a
higher participation among older people. Men of age 55-64 contribute 0.5 p.p. and women 2.5p.p.
The rise in the female participation is expected to continue and show up in the participation rate of older
women. Aside from this cohort-effect, the projected rise in the participation of older people is also strongly
influenced by the disability reforms. CPB estimates that without these reforms the number of disability
claimants would have been 500,000 persons higher than in the present projection. The disability reforms are
assumed to raise the aggregate participation rate by about 4 p.p. in 2020. Especially as a result of the
disability reforms, it is expected that the average exit age from the labour market will rise by two years in
2020 in comparison with 2000.
Static comparisons of the activity rates before the pension reforms (1999) and after (2005) are showing an
increase for women (age group, 55-57 between 22% at age 56 and 12% at age 57) and for men (in the age
group 60-63 between 5% at age 63 and 24% at age 60).
A lot of insured people decide to retire early due to very low incentives to postpone it. Moreover there are
incentives to retire earlier because there are no reductions in benefit formula in case of early exits. Average
age of entry into the labour market is also increasing. As a result younger generation will have less
contributory years when they achieve retirement age. High unemployment rate as well strengthens this
effect. On the other hand increasing participation rate will partially neutralize influence of above mentioned
factors.
Of most concern is that the employment rate of the working age population has decreased by 5.6 percentage
points since 1999. Increasing employment (especially for older workers) from its current low level is
considered crucial for the long term sustainability of the pension system. A proactive strategy is developed
to increase incentives for employers to hire and retain workers over 45 as well as those close to retirement
through subsidies. The effectiveness of this strategy and other strategies aimed at rising the average exit age
are planed to be analysed.
It is foreseen that the number of early retirements will gradually decrease until 2013. Recent reforms of the
system focused on the early retirement principle. The number of those having chosen this option doubled
between 2002 and 2005, and although only a small percentage (less than 3%) are retiring early, it is a
concerning trend. Financial incentives are offered to the persons wishing to work after the legal retirement
age in the form of supplementary points for insurance periods. There is also a possibility of cumulating
pensions with income from professional activity, irrespective of the income level.
As legal requirements for acquisition of pension have changed after a reform in 2000, average retirement
age has been constantly increasing. After ending the transitional period for women (2014), the retirement
5
János Köllõ, Beáta Nacsa: Flexibility and employment in the labour market: Hungarian experiences,
Budapest, ILO, 2005
6
C. van Ewijk, et al., Ageing and the Sustainability of Dutch Public Finances, CPB Netherlands Bureau for
Economic Policy Analysis, 2006, p. 72-73.
59
age will constantly increase over years.
A significant shift in the employment rate of older workers has taken place, notably among 55-59. However,
creating job for 50+ remains very challenging.
As a result of the pension reform, the overall employment rate increased from 69% to 70% because of the
FI
increase of the minimum age limits in the statutory pension system as well as of the unemployment path to
retirement. Employment rate of the 55-59 age group is expected to increase from 65.3% in 2004 to 70.4% in
2015 and that of the age group 60-64 from 19.6% in 2004 to 41% in 2015. Average exit age from the
labour market is to increase from 59.2 in 2004 to 61.1 in 2015.
Invalidity pensions like the sickness benefit have negative effects on employment for those near retirement
SE
age and are the most common early exit route. Occupational pensions can be combined with other types of
severance agreements.
The average exit age was 63.1 years in 2006, for persons that were in the work force at 50 years of age. This
means an increase from 1994 by just over one year. One important reason for the increase is that the babyboomers born 1943-1947 got, on the average, a longer school education than earlier generations, and have
worked in occupations with less physical strain. It should be noted that the average exit age has not
increased 2004-2006 and does not seem to increase further in 2007.
Government’s Pathways to Work pilot schemes provide a co-ordinated approach to addressing the barriers
UK
that people face when they have an illness or disability. Preliminary evaluations of indicate an increase of
around 8 p.p. in the number leaving benefits in the first 6 months of their claim compared with national
rates.
The absence of a Member State from the table indicates the fact there was no information on likely impacts of
reforms on employment behaviour available on it. Source: National replies to the SPC questionnaire.
SK
60
3.2.4.
Income situation of older people
Measuring the income situation of the elderly in connection with recent reforms or planned
reforms is also a complex task. Only a few Member States provided elements of evaluation
and it was very general in nature.
Some Member States project a worsening of the income situation of the elderly in relation to
early pathways from the labour market as well as more general reforms. In BE a reduction in
benefit ratios between 2005 and 2050 is projected due to the evolution of social policy
parameters. In HU a decrease in pension levels is projected in the long run as the number of
people using early exit routes is increasing, which provides lower benefits than the standard
rules. RO is facing a situation with low levels of pension benefits, which has been further
strengthened by a high take up of early pensions. It has lead to an increase in poverty levels
especially for the cohort 65+. Special attention is paid there to the large gender discrepancies
at risk of poverty, stemming mainly from gender pay gaps and the low levels of credit
provided for non-contributory periods. In EE, where the employment rate of the elderly
exceeds the Lisbon target, the current low level of pensions is seen as one of the reasons for
this high participation, as employees have a very strong incentive to go on working (pension
benefits are extensively allowed to be combined with earnings from employment).
A few Member States on the other hand see uncertain developments in the income level of the
elderly. In LT, where benefits from early exit schemes are not actuarially adjusted, they could
contribute positively to the income situation of older people, especially taking into account
that in the majority of schemes accumulation with earnings from work and other benefits is
allowed. In NL the prospects are uncertain as the income of older people is expected to
increase faster than the income of younger generations, though an incomplete building up of
public pension rights could also result in a growing number of older people relying on
supplementary social assistance. In SE, it is expected that although early exit generally means
a lower lifetime pension, increased labour force participation could ensure adequate pensions.
In FI as well, the 2005 pension reform is not expected to change significantly the average rate
of pensions (at the age of 69) for those who now start their working lives, although the
introduced life expectancy coefficient decreases the pensions. Increases of accrued pension
rights by working longer are expected to compensate for the decreasing effect of the life
expectancy coefficient included in the pension reform. Pension reform is not expected to have
a significant effect on the distribution of the pensions either, as the smallest pensions are
expected to increase slightly and the average pensions to decrease slightly. The UK also
underlines that getting people back to work will improve their income situation and will
ensure that support is not withdrawn once a claimant is back in work.
3.2.5.
Projected spending on these benefits
Member States generally expect a decrease in the spending on early exit schemes reflecting
decrease in the number of beneficiaries (AT, BE, DE, IE, LT, HU, NL, PL, SK, FI, SE). A
few Member States do not, however, expect significant changes in spending on early exit
benefits from the current levels (EE and LV).
In BE this is expected to decline from 1.5% of GDP to 1.1% of GDP by 2050 as a result of
fading out or diminishing of various early exit schemes. In DE decreases in contribution rates
indicate that raising the retirement age to 67 by 2030 would lower the statutory pension
insurance’s contribution rate by 0.5 percentage point. In HU projections of the Ministry of
Finance suggest a gradual decline in the share of old-age expenditure cover payments
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disbursed to early retirees from 12.2% to about 6p.p. by 2020, as a result of tightened
eligibility conditions. In IE, early exit schemes will form a lower percentage of overall old
age expenditure, due to planned reforms (PRETA), improving participation of older workers
and the impact of ageing on old age payments (contributory pension expenditure is currently
4-5 times the total cost of Invalidity Pension, while by 2061 contributory pensions are
projected to be almost 14 times the cost of Invalidity Pension). In NL public expenditure on
disability pension schemes is expected to diminish from 12.9% of total age related public
expenditure in 2006 to 10.1% in 2020 and 6.8% in 2040. In PL, expenditures for preretirement benefits and allowances are projected to gradually decrease (as a result of closing
several exit paths) until in 2050, when they could represent just 0.06 % of GDP. In SE, the
projections include unchanged labour force participation amongst those aged 55-64 for the
next 10 years which means the relative spending will decrease. Increased labour force
participation in the mentioned age group would, ceteris paribus, decrease the spending even
further.
CONCLUSION
Following initial steps in pension reform and improvements in the labour market situation, the
employment rate of 55-64 has increased in recent years, from 36 % in 1997 in EU27 to 44 %
in 2006. It nevertheless remains far below the Lisbon target of 50%. And the projected
increase in life expectancy - in particular at 60 or 65 - is a key driving force of future
demographic pressure on pension systems, which underlines the need to increase employment
rates among 55-64 in the coming decades. The current situation where employment rates in
the EU decline rapidly between 55 and 64, while most transitions from work to retirement are
actually not direct clearly puts pressure on the future adequacy and sustainability of pension
systems.
Early exit benefits (mainly special early retirement schemes for certain professions,
unemployment and disability, but also in some Member States supplementary pensions or
survivors' pensions) tend to be one of the main elements in the path out of the labour market.
The take-up of these benefits represents often around 20% of the population aged 55-64.
Their adaptation, by reducing the take-up of various benefits before going on statutory
pension can thus provide a strong contribution to the objective of promoting longer working
lives. This is a key step to achieving higher employment rates of those aged 55-59 and thus of
older workers as a whole.
The recent improvement in the employment situation of 55-64 also coincides with a growing
divergence between Member States, indicating slower progress for some groups (men versus
women, higher educated versus lower educated). Such slower progress could weaken future
adequacy and sustainability of pensions, as future pensions levels will more and more depend
on pension rights accrued throughout professional life. In this respect, design of early exits
from the labour market should also aim at focusing on these groups where progress is slower.
Most Member States are engaged in reforms to adapt these schemes and reducing the take-up
of early exit benefits. Reforms are focused on the design of unemployment, early retirement
benefits and access to disability pensions and rehabilitation. Some Member States have also
reviewed taxation and the design of private pensions.
Key dimensions in reforms of early paths from the labour market are to:
• Restrict eligibility conditions while creating an adequate framework for older
workers’ continued participation in the labour market, allowing for exceptions in
the case of particularly demanding or hazardous jobs;
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• Increase incentives to work longer for employees (notably through fiscal rules)
and also for employers to hire older workers and not rely on early exit schemes;
and
• Enhance work opportunities for older workers and disabled workers. Important
aspects include improving working conditions (notably by preventing health
problems) and developing active measures such as training or specific
programmes to help re-enter the labour market.
While recent trends in take up of these benefits are showing progress in a number of Member
States, in others take up is still increasing. Given the current high levels of take up of these
benefits and the significant drop of employment rates from age 55, it seems that more steps
will be needed in a number of Member States in order to achieve more systematic reforms of
these schemes and reduce significantly the length of the period between the end of the last job
and the take-up of a statutory pension. It is significant that about half of the Member States
are to be currently in the process of developing further steps in reforms to further adapt the
way these schemes are designed.
It should be stressed that such steps in reform also need to be part of a holistic approach to
create labour market opportunities for older workers and less skilled ones as they can be less
employable. Retraining is a vital part of this strategy, as well as preventing early retirement
by strengthening prevention and improving workplace health and safety standards.
Lastly, the degree of evaluation and assessment of the effect of current reforms (merely as
regards future adequacy, and to a lesser extent as regards employment and expenditures
trends) is uneven among Member States and more steps would be needed in order to achieve
more systematic assessments of the impact of current reforms.
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ANNEX – DATA USED
Data used as regards labour market situation and take up of benefits in this report are taken
from the national replies to the SPC questionnaire of early exit and from the Labour Force
Survey and in particular the LFS 2006 ad hoc module on transition from work to retirement.
LFS 2006 ad-hoc module on transition from work to retirement
The LFS 2006 ad-hoc module on transition from work to retirement covers the population
aged 50-69 that is not at work and who worked after 49 and for some questions also the
population at work. Figures provided here are first preliminary results and will be subject to
revision (in particular they do not cover all Member States.
Although the ad hoc module provides essential information for analysis on the patterns of the
early exit from the labour market, its scope remains limited as regards take up of benefits.
Namely the LFS ad-hoc module provides data on the number of people on disability and
sickness pension, on early retirement pension and on the possible combination of the three,
but information is lacking on other types of early exits. Additional quantitative data has been
requested in the SPC questionnaire to fill in the gaps in order to widen the perspective of the
current study, also including a few other important factors as receipt of survivor benefits,
payouts from private schemes and special early retirement schemes.
The LFS ad hoc module also provides general information relevant for the current study on
planned age for stopping all work, main labour status after leaving last job, main reasons for
(early) retirement and information on the type of benefits a person is receiving (other than
individual retirement pension).
The ad hoc module also provides information on:
• Reasons and motivations to defer retirement (which is partly out of the scope of the
current study).
• The main labour status just after leaving last job or business and the number of years
spent working for pay or profit during the working life). Among the options are
'unemployed', 'in retirement or early retirement', 'long term sick or disabled' and 'other
reasons'.
• Main reason for retirement or early retirement : 'job lost', 'had reached retirement age',
'own health or disability', 'care responsibilities', 'favourable financial arrangements to
leave' and 'problems related to work' that give quite a wide and interesting overview of
main decision triggers.
• The type of individual pension or benefit received shows whether the person is in
receipt of disability or sickness pension, early retirement benefit or other individual
benefit not elsewhere classified.
National replies to the SPC questionnaire of early exit
The data used in this report are taken from the national replies to the SPC questionnaire and
are not necessarily strictly comparable as they are taken generally from national
administrative data. Furthermore, data on take-up of benefits are not always available for age
brackets breakdowns 55-59 and 60-64 which are the focus here. As a consequence, the
various tables provided do not allow comprehensive comparisons, but provide some
indication on the overall level of take-up.
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In some cases, some approximations were done on the basis of the national replies and they
are reported in the table below. In a number of cases, figures of number of benefits were
divided by population numbers as provided by Eurostat.
Table A1 – Estimations and approximations from national replies to SPC questionnaire
MS
BE
DE
FR
HU
Invalidity benefits: these data are actually those provided for larger age brackets in the national reply.
Early retirement benefits: Vorruhestandsgeld and Altersteilzeit are added; these are financed by companies.
Unemployment benefits: RMI added. Invalidity benefits : 2004 data
Unemployment benefits: data represent the number of early retirement pensioners (when the employer pays
the pension before standard retirement age) in the given age cohort. For early retirement benefits, these data
do not contain the figure of the most relevant early pensions form of advanced pension and advanced pension
with reduced sum (it was described in questionnaire on flexible retirement in October 2006).
The figures on advanced pension are not available, because they are included in old-age pension data,
however according to CANPI data 94% of old age pension applicants retire before reaching the standard
retirement age (see 2006 NSR on Soc. Prot. and Soc. Incl. Annex 1.1. p 34.).
For survivors' the sum refers to different survivors' benefits (Early retirement Survivors' Pension, National
MT
Minimum Widows Pension, Survival Retirement Pension, Widows' Pension)
Source: National replies to the SPC questionnaire.
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