NETHERLANDS - Financial incentives and individuals' health determine whether workers want to carry on working when approaching retirement, researchers have found.

Economists Arie Kapteyn of pension knowledge centre Netspar and Tatiana Andreyeva of Yale University - who conducted the study - have recommended on the back of their findings governments should focus on a tailor-made financial set-up of their pension system, as well as improving public health and a healthy labour environment.

The researchers, who looked at pension behaviour of workers in 12 EU countries, including Switzerland and the US, concluded policy changes based on improved health and financial incentives have a significant impact in at least some countries.

"If, for example, all Dutch workers are in good health and work in a healthy environment, the labour participation of the age group between 60 and 64 could increase by 5%," suggested Kapteyn and Andreyeva.

Similarly, if the lower level health benefits seen in the US were applied to Swedish workers, labour participation of the same age group in Sweden would rise by 14%, the study suggested, while the corresponding figure would be 10% for both the Netherlands and the UK.

Researchers also found an increase of the official retirement age by two years would result in a 10% rise of people in both Sweden and the Netherlands working beyond the age of 60.

Based on their study, Kapteyn and Andreyeva also recommended the official retirement age should be raised, and include an indexation which is linked to the average life expectancy.

"Increase human capital by investing in proper education, they argue.

Whil preventative health measures, such as tackling obesity and high blood pressure, could decrease the number of years of ill health and increase the average life expectancy, concluded Johan Mackenbach, of Erasmus University, in another study, a cut in smoking and an increase in exercise taken led to mixed results: an increased life expectancy, but an unchanged period of ill-health, Mackenbach's research indicated.

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