THE COST OF AGEING (2)

People in developed countries have longer and longer life expectancies. This is good in some ways, but not in others; looking after old people is expensive. 

In 2006, Denmark decided to raise the pension age, so that everybody got (on average) 14.5 years with a state pension. Back then, that meant raising it from 65 to 67 from 2027, with a phase-in period starting in 2024. In 2011, that was adjusted so that the 67-year rule is fully in place by 2022.

Demographic statistics show that if the 14.5 year rule is to hold, then the state pension age should be raised to 69 by 2030. Since the political parties also agreed that any increase of a year or more in the state pension age required a 15-year notice period, that decision needs to be taken next year. With a general election due by next September at the latest, that will require some courageous politicians.

Much is at stake. Indexing pension rights to life expectancy is estimated to benefit the state to the tune of 2.5% of GDP, or around kr.50 billion. As I said, looking after old people is expensive. And the easiest way to cut that cost is to (in effect) reclassify old people as "not old enough".

Walter Blotscher