Denmark hs announced it will raise its retirement age to 70, with the change coming into place in 2040. The new rules means Danes will be the oldest workers on the continent.
Denmark’s retirement age has been pegged to life expectancy since 2006, and is reviewed every five years. The welfare agreement of 2006 was introduced to protect the country’s finances and ensure pensions spending are kept on a sustainable trajectory. Without action, leaders were concered that the cost of the state pension would spiral out of control as Danes lived longer but paid the same amount of taxes over their lives.
Despite the UK retirement age currently sitting at 66, the British Government may follow the Nordic country’s lead and increase it by four years.
The UK pension age is to climb to 68 by 2046, but Department of Work and Pensions Secretary Liz Kendall may be forced to bring that increase forward.
Without changes, the cost of the expensive triple lock on pensions will continue to swell and force either higher taxes or spending cuts elsewhere. Ms Kendall announced a review into the state pension age last week.
“There’s kind of cross party consensus that … we need to increase the state pension age to deal with the rising cost of the state pension system,” Heidi Karjalainen, an economist at the Institute for Fiscal Studies, told The Telegraph.
“I don’t think we can really afford to [wait to the 2040s], to be frank,” Nigel Farage, the Reform UK leader, told the same publication.
“If there is a sudden economic miracle, then it might change that. But it does not look to be happening any time soon.”
