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Denmark pitches pension reform to avoid austerity measures

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  • Denmark pitches pension reform to avoid austerity measures

DENMARK - The Danish government has proposed abolishing early retirement in an effort to save DKK18bn (£2.4bn) by 2020.

Under the current system, workers can retire as early as 60.

However, the government has argued that increasing the minimum retirement age to 65 would allow it to tackle its growing deficit, staving off public spending cuts that have impacted other European countries in the wake of the financial crisis.

In a statement made in Folketinget, the Danish parliament, the government said the proposed changes, which make allowances for flexible early retirement of certain workers, would introduce 70,000 employees back into the workforce and boost public finance by DKK45bn.

Finance minister Claus Hjort Frederiksen praised the government for the proposed reforms, saying they would allow funds to be spent on the vulnerable, as well as the elderly and children, rather than paying healthy people to retire before their time.

Prime minister Lars Lokke Rasmussen added that the reforms were necessary to preserve investor confidence in the Danish market, explaining that if this trust were lost, it would result in increased bond yields on Danish debt.

The government's full proposal adds that while the retirement age is set to rise to 68 by 2030, further adjustments could be made to keep it in line with longevity projections.

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