An alarm has been sounded across Europe — including in Greece — over upcoming increases in retirement age limits due to demographic pressures. Denmark has already led the way by passing, amid public backlash, a law setting retirement at age 70 for today’s 55-year-olds.
By the end of 2026, the Greek government will be required to decide whether and how to raise the general retirement age starting from 1 January 2027, based on changes in life expectancy. In particular, the link between retirement age and life expectancy for people over 65 will be examined. Most European countries already apply such a system, where retirement ages adjust upward in line with increases in life expectancy.
Three key demographic indicators will determine whether and to what extent retirement age limits will rise from 2027 onward. The first is the old-age dependency ratio, measuring the population over 65 relative to the working-age population, which is projected to rise to 60% from the current 39%. The second is the aging index, which is increasing — currently, there are only 100 working-age individuals to replace every 170 people over 65. The third is the fertility rate, which saw a slight improvement from 1.3 children per woman in 2018 to 1.5 in 2022, but still falls far short of the 2.1 replacement level seen in developed countries. Low fertility is the most pressing issue and is evident in the negative birth-to-death balance, which worsened dramatically over five years — from -33,856 people in 2018 to -64,706 in 2022.
Greek legislation already includes a mechanism, in effect since 2021, to adjust the retirement age every three years based on changes in life expectancy. However, adjustments scheduled for 2021 and 2024 were not implemented. This is partly because retirement ages had already increased with the end of transitional rules and, as of 1 January 2022, the general rule applies: full retirement at 62 with 40 years of insurance or at 67 with at least 15 years. Additionally, life expectancy data during the pandemic was skewed, disrupting the scheduled updates.
Therefore, the next review point to determine whether and how much retirement ages will increase — assuming life expectancy has risen — will be in 2027 and again in 2030. If life expectancy is found to have increased, retirement ages will automatically rise from 2027. This process will repeat every three years, meaning that by the end of 2029, the life expectancy data will be re-evaluated to determine whether retirement ages will increase again starting 1 January 2030. The same review will take place in 2033, and so on.
According to ELSTAT, life expectancy for men over 65 is projected to increase from 18.8 years in 2019 to 20 years by 2030. For women, it is expected to rise from 21.8 to 22.9 years over the same period. Based on OECD practice, the link between life expectancy and retirement age can be applied using different ratios. The 1:1 ratio means that for every one-year increase in life expectancy, retirement age also increases by one year. A 2/3 ratio would increase retirement age by 8 months for every 12-month gain in life expectancy, while a 1/3 ratio would mean a milder adjustment of 4 months for every one-year gain.
One of the most dramatic consequences of the demographic crisis on the pension system is the declining ratio of insured workers to pensioners. Currently, this ratio stands at 1:1.66. In 15 years, it is expected to drop to 1:1.25. In other words, if today there are 166 insured individuals supporting every 100 pensioners with their contributions, by 2040 there will be only 125.
Studies by international organizations such as Eurostat, the European Commission, and the OECD have put the Greek government on high alert due to the “demographic time bomb.” These studies conclude that retirement age limits will need to rise, as from 2027 they will be linked to life expectancy and adjusted every three years if life expectancy after age 65 continues to increase. For men, life expectancy at 65 is projected to rise from 18.7 years in 2022 to 23.9 years by 2070; for women, from 21.7 to 26.7 years.
According to the OECD, Greece has among the lowest effective retirement ages in Europe, with the average for women below 60 and just 63.2 for men — lower only in Luxembourg.
Source: Ta Nea
