BELGIUM – Belgium’s early retirement schemes should be phased out as they create “perverse” incentives that have a significant cost to society, a new report says.
“Early retirement schemes should best be phased out since they create perverse incentives at a significant cost to society (e.g., it pays to be laid off into early retirement rather than to keep working past the age of 60),” the International Monetary Fund said in a report on Belgium.
“By making the retirement decision actuarially fair across all pension schemes, and providing regular full information about its financial consequences, the decision about when to retire can be left to the individual.”
The IMF added that the challenge of keeping older workers in the workforce needed life-long learning and more flexible work arrangements. But it warned against such measures creating “new disincentives for hiring”.
It said that there should be additional forms of assistance for older workers such as temporary subsidies for training with new employers in the wake of corporate restructuring.
“There is no room for complacency in light of the considerable challenges posed by impending population ageing and increasing global competitive pressures,” the IMF stated.
“As recognized by the authorities and social partners, further fiscal adjustment is needed to build up budget surpluses to fund ageing costs and avoid the need for future tax increases or cuts in already low pension benefits.”
It said that employment needs to be lifted “to raise growth, facilitate fiscal consolidation, and preserve favorable social outcomes”.
“This is not a new message, but decisive action has become pressing.”