Transition from work to retirement in EU25

The policy agenda of extending working lives requires a holistic understandingof factors underlying the decision of older workers to withdraw from work andto retire. This brief paper presents employment patterns and trends of olderpeople across EU Member States and identifies policy initiatives that wouldencourage more flexible and later retirement. The descriptive empirical evidence(from the EU Labour Force Survey) indicates that there are a broad range ofexperiences in EU countries with respect to the employment of older workers(those aged 50 and over). Strikingly, in the majority of EU15 countries, close toone-half of those of 50 and over are either unemployed or inactive, with relianceeither on early retirement pensions or on social assistance benefits. The recentpension reforms in a number of these countries have increased the retirementage and this is likely to induce older workers to work longer. There is alreadysome evidence that the effective retirement age is on the increase. Resultssuggest that the increase in older workers’ employment is stronger for womenthan for men, and also for more highly educated. In most instances olderworkers either tend to be in full-time employment or inactive with very fewoccupying intermediate positions. Although there is some evidence of a gradualtransition towards retirement, there is still a relatively minor proportion of thework force taking advantage of this, as well over 70% of men and around 55%of women in employment in their early 60s worked 35 hours a week or more.The policy aim should therefore be to encourage ‘flexible and laterretirement’. Additional incentives need to be provided so that people are notonly able to move between jobs in later working life but also able to work parttime,without losing their entitlement to benefits (such as early retirementpensions). Such policy incentives will enable workers to avoid the phenomenonof a ‘cliff-edge’ fall into retirement that many of them often face.[...]