Börsch-Supan at research seminar: Flexible retirement solutions don’t work

Many countries have tried to raise employment rates and extend the working lives of elderly workers with different flexible retirement options. Axel Börsch-Supan argues that the solutions have failed.

As a rule, flexible retirement solutions offer workers the opportunity to take out a pension benefit and reduce their number of working hours. In Finland, the partial old-age pension offers flexibility, and the person retiring on such a pension can decide how much they work.

Economist Axel Börsch-Supan (photo), keynote speaker at the research seminar arranged by the Finnish Centre for Pensions and the Family Federation of Finland on 5 September, argues that flexible retirement schemes do not work.

“Employment rates in OECD countries seem to improve only slightly thanks to flexible retirement schemes. The number of working hours have decreased.  For example, in Austria, the working hours of elderly employees dropped by 30 per cent after flexible retirement options were introduced,” Börsch-Supan states.

According to Börsch-Supan, the current flexible retirement solutions cannot be the answer to increased labour and longer working lives.

Director Mikko Kautto of the the Finnish Centre for Pensions argued that flexible retirement is one pension policy tool among others.

“I don’t find flexible retirement solutions and higher retirement ages to be mutually exclusive. We need both of them, but we have to find a balance between them. The Finnish pension scheme has always included solutions that offer flexibility,” Kautto points out.

Axel Börsch-Supan is the Director  of the Munich Center for the Economics of Ageing and the leader of SHARE (Survey of Health, Ageing and Retirement in Europe). He has published extensively on population ageing, pensions, retirement, working and demographic changes. Börsch-Supan assessed the 2005 pension reform in Finland.

Munich Center for the Economics of Aging
Research seminars at the Finnish Centre for Pensions

Photo: Vesa Laitinen