A pensions timebomb in Europe

Now Reading:

A pensions timebomb in Europe

A pensions timebomb in Europe
Text size Aa Aa

To avoid setting off what has been described as a pensions timebomb, Europeans face having to work longer and harder before they can retire.

The EU warns that the ratio of pensioners to workers in Europe will double in the next 50 years, with two active workers for every retiree.

So life expectancy continues to rise, and many state pension schemes are placing a strain on public finances and appear unsustainable.

France says its pension fund will be 10.7 billion euros in the red this year. Without reform, that figure will hit 50 billion euros in 2020.

French and Italian pensioners are currently among the youngest retirees in Europe.

Spaniards, Britons and Germans generally tend to stop work at 65.

That’s all set to change under a wave of new austerity measures being passed by EU governments, which include raising the age pensioners can draw their state retirement benefits.

There is also a second criteria to be taken into account: the number of years a worker has paid into the system before he or she can claim a full pension.

With longer life expectancy and the need to cut soaring budget deficits, many Europeans will have to wait before they can retire on a full pension

By 2023 in France, for example, an employee will have to work 41 years and six months before qualifying for full rights.

Another way to plug the pensions gap is to encourage potential retirees to stay in work.

The British government has taken the unprecedented step of axing the mandatory retirement age of 65.

It says it will give people the choice to stay in the workplace as they enjoy longer and healthier lives.