Flexible retirement instruments: an analysis of policies in 28 European countries

This report, prepared by the European Social Policy Analysis Network (ESPAN), explores flexible retirement pathways in the 27 EU countries and Norway. 

Drawing on country reports, it examines the main flexible retirement instruments (deferred retirement, differentiated pensionable ages, flexible pensionable ages and combining a pension with-work) and their implementation in the countries covered. 

Flexible retirement pathways across the EU and Norway

Flexible retirement pathways are widely available across the EU and Norway but vary significantly in their design and incentives offered. 

Deferred retirement, which can include actuarial and sometimes tax incentives, exists in all but one of the 28 countries covered.

Differentiated pensionable ages, available in half of the countries, make it possible for workers to retire earlier without a penalty if they have a long contribution record, while flexible retirement ages, available in three countries, allow workers to choose their retirement age within a defined range.

Combining a pension with income from work is possible in all countries with varying eligibility criteria, while the option to combine part-time work with a partial pension is less common. 

Key findings and policy pointers

There are three main trends in recent reforms across countries. First and foremost, countries encourage the combination of work and pension receipt through tax incentives and/or easier conditions for combining pension income with income from work. Second, countries increase incentives to postpone retirement through improved accrual rates and additional bonuses. Third, they introduced or refined eligibility conditions for differentiated pensionable ages to support those with long careers.

Government and pension scheme websites provide general information on flexible retirement pathways in most countries, whereas online pension calculators (only in some cases) offer calculations regarding flexible retirement pathways.

While effective retirement ages and labour market participation rates for those aged 60 or over have increased significantly over the past decade, especially for women, gender gaps persist in a number of countries. The scarce national data at hand suggest that the take-up of flexible retirement pathways remains limited among the less educated, manual workers and women, while higher-income and better-educated workers are more likely to benefit from deferred retirement options or to combine a pension with work. Working beyond the pensionable age can be driven by financial necessity or enjoyment of work, with higher-income people more likely to be motivated by non-financial factors such as maintaining social connections and a sense of purpose.

The redistributive potential of flexible retirement pathways is constrained by structural inequalities. Higher earners benefit more from options such as combining pensions with paid work or incentives to delay retirement. Similarly, women, especially those with care responsibilities, benefit less from these pathways. Differentiated pensionable ages help address equity concerns by allowing early retirement without a penalty for those with long working lives.

The report concludes with several policy recommendations, including:

• further explore the design of financial incentives to encourage deferred retirement and the combination of retirement and work;
• better tailor and improve access to differentiated pensionable ages for workers with long careers and/or in physically demanding jobs, while taking into account sustainability concerns; 
• improve the availability of digital and non-digital information sources, including on flexible retirement pathways, to make retirement planning accessible to diverse groups of workers; and
• further integrate flexible retirement pathways with labour market policies. 

It also suggests exploring further how flexible retirement pathways intersect with broader labour market dynamics and social protection measures (such as unemployment and disability benefits), as well as their impact on pension adequacy and fiscal sustainability.

Flexible retirement: deferred retirement and combining an old-age pension with work in the EU-27 and Norway, 2024