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IMF adds voice to chorus wanting Europe to increase retirement age

EUROPE - The International Monetary Fund has added its voice to the growing number of calls for Europe to urgently raise its retirement age.

Rodrigo de Rato, managing director of the IMF, told a Spanish conference of chief executives that the euro-area was growing much slower than the global average and deep-seated problems, including population ageing, faced the majority of the European Union. Extrapolating from third-quarter growth estimates, de Rato said euro-area growth would be 2%, compared to global growth of 5% this year and 4% in 2005.

He said: “Looking beyond the near-term, deep-seated problems are facing the older members of the European Union. Jobs are scarce for many… and the tax burden in many countries is large, yet fiscal positions are not sustainable. Population ageing will put further pressure on already strained welfare systems.

“Matters will only get worse as ageing accelereates after 2010 in many countries, with the rising revenue burden creating a risk that output growth will almost grind to a halt. What is urgently required is a growth-friendly approach to address these challenges, including steps to raise the retirement age and encourage more life-long training.”

De Rato’s call followed a series of public calls for European countries to increase retirement age as one way to put their finances in better shape. At the start of the month, Anne Seiersen, head of the occupational pensions department at the Danish Insurance Association, the ForsikringensHus, told IPE: “It is commonly acknowledged that sooner or later we need to raise the retirement age but there’s not the political will to do it just now.”

Last year in Germany the Rürup Commission suggested a phased-in raising of the retirement age to 67 and a reduction in pension benefits while in the UK there is increasing discussion ahead of a proposed law on age discrimination about whether there should be a standard age of retirement and, if so, whether it should be increased from 65.

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