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Consequences of an ageing Europe stokes misinformation.
Europe is facing a major demographic shift with an ageing population and declining birth rates. As the proportion of the population aged over 65 grows, countries are scrambling to reform pension schemes to avoid the mounting cost on government budgets and ensure the overall sustainability of the system.
But politicisation, combined with misinformation, is fuelling worries and backlash over the reforms, particularly for future generations who fear they’re getting an unfair deal. Euranet Plus has investigated the issue.
Claim: Europeans retire earlier than anyone else in the world
The retirement age in the European Union is not significantly lower than elsewhere in the world, although there are significant variations between the different member states. According to a Nasdaq report, in 2023 nine of the 10 countries with the lowest retirement ages were outside Europe. In the same year, the average retirement age in the EU was around 61, ranging from 58 years in Slovenia to nearly 66 in Denmark, according to Eurostat. https://map-pension-age.vercel.app/
Many European countries are also raising their statutory retirement ages, so averages are likely to go up in the years to come. Current policy changes will see retirement ages rise to 62 years in Luxembourg and Slovenia; and as high as 70 years or more in Denmark, Estonia, Italy, the Netherlands and Sweden, according to the OECD.
Retirement does not necessarily mean an end to employment. On average, 13 per cent of Europeans continue to work after receiving their first old-age pension, Eurostat reported. And in Estonia, Latvia, Lithuania and Sweden, this figure was over 40 per cent.
Claim: Pension costs are crippling EU states
Although not yet crippling EU states, demographic shifts are resulting in pensions costing more as a proportion of a country’s GDP and threatening to increase government deficits. By 2020, the average pension contribution level in Europe was 11 per cent of GDP, according to a 2022 Finnish Centre for Pensions report. A 2021 IMF report stated that “pension spending in Europe was projected to increase in excess of 40 per cent between 2010 and 2060”.
The IMF said that reforms are expected to prevent that rate from creeping up much further. Still, the institution reported that the average pension system deficit in Europe as of 2020 was about 2.5 per cent of GDP. And the EU’s 2024 Ageing Report warned that, without further policy changes, the deficit would grow to 8 per cent of GDP by 2070.
Claim: Young won’t see a pension in the future
Young people today will receive public pensions in the future, however, it is unlikely to be as generous as generations past.
The European Commission’s 2024 Ageing Report predicts significant discrepancies between people’s final income and their first pension payment by 2070 – meaning that young people will see smaller pension payments than they will have contributed to the system. “On average, people currently retired in France end up with a pension pot containing double their own contribution – much more than future generations can hope to receive,” economists have warned.
Experts have noted that while “demographic transitions are predictable” and the tools needed to address them exist, “reforms collapse when they collide with electoral incentives and public mistrust”. France saw major public backlash over a proposal to raise the retirement age, leading to reforms being scrapped.
But the move simply means delaying the addressing of the country’s growing budget deficit, largely the result of “generational unfairness”, economists argue.
Similar concerns about unfairness have played out across the EU.
German liberals of the FDP party have said that the proposed pension reforms aren’t enough, are unfair to young people and fail to stabilise the system long-term. Meanwhile, the foundation for the Rights of Future Generations, a think tank, claimed that reforms would only provide benefits to current pensioners while pushing financial burdens into the future.
This rhetoric gets political backing as well.
Young Austrians have told local media that “we don’t want to work until we’re 80” while in Portugal some complain that they already have to work too long as the retirement age continues to be pushed back.
Still, many experts and technical reports argue that a combination of reforms – ranging from raising the retirement age to encouraging supplementary plans and targeted worker immigration – could help preserve the system.
Additional deliverables: For this monthly fact check, I also research and produce a much longer in-depth report for Euranet journalists to supplement their reporting on the topic, as well produce a pre-recorded radio story of the public-facing article.