Factbox: Legal conditions for retirement in Europe

(BestGrowthStock) – Following is a summary of the legal conditions of retirement in several Western European countries:

========= GERMANY ==========

Average exit age: 62

Male: 62.6

Female: 61.5

Statutory retirement age: 65

Old-age dependency ratio (population 65+ as percentage of population 15-64):

2010: 31

2060: 59

Germany faces a severe demographic challenge. Recent reforms in Germany will increase the retirement age to 67 from 65 in the period between 2012 to 2029.

In 2004, public pension expenditure stood at 11.4 percent of Gross Domestic Product and is forecast to increase to just over 13 percent by 2050, according to Allianz. This compares to 10.6 percent and 12.8 percent for the European Union as a whole.

According to the OECD, Germans who contribute to the pension system for 45 years will receive 43 percent of their gross wages in pension.

There are 20 million pensioners in Germany now with an average pension of 811 euros per month. 73 percent of the pension payments come from contributions and 25 percent from federal government subsidies.

Costs were 164 billion euros in 2009 and will rise to 172 billion in 2013.

========= GREECE =========

Average exit age: 61

Male: 61.6

Female: 60.5

Statutory retirement age

Male: 65

Female: 60

Old-age dependency ratio (population 65+ as percentage of population 15-64):

2010: 28

2060: 57

Greece is likely to be one of Europe’s countries hardest hit by demographic developments and also offers the EU’s most generous state pension. While this situation seriously threatens the sustainability of public pensions, reforms in Greece have lagged behind other European countries.

Analysts say pensions for average earners are higher than their income before retirement, which means that saving for occupational and private pensions has not been a priority and is therefore underdeveloped.

The gross replacement rate, or pension relative to last earnings, of Greece’s public pension is 105 percent, translating to 115 percent in net terms, for a 40-year career with average earnings.

The official retirement age is 65, but retirement is also possible after 30 years of contributions, or based on a combination of age and contribution periods.

According to the OECD, public pension expenditure will increase to almost 25 percent of GDP by 2050, about twice as high as the value projected for the European Union.

========== ITALY =========

Average exit age: 60.4

Male: 61

Female: 59.8

Statutory retirement age

Male: 65

Female: 60

Old-age dependency ratio (population 65+ as percentage of population 15-64):

2010: 31

2060: 59

The Italian pension system is dominated by the state and faced with challenging demographics. Reforms in 1995 brought a previous very high replacement ratio of nearly 90 percent to around 70 percent.

The retirement age is 65 for men and 60 for women, but since the length of contributions also counts, actual retirement ages can be considerably lower.

Government reforms aimed at stabilizing public pension expenditure will also substantially bring down the replacement rate in future and bring pension spending to around 15 percent of GDP.

========= SPAIN =========

Average exit age: 62.1

Male: 61.8

Female: 62.4

Statutory retirement age: 65

Old-age dependency ratio (population 65+ as percentage of population 15-64):

2010: 24

2060: 59

Spain will experience one of the most severe demographic challenges faced by any country in the world, according to Allianz, with the country’s generous public pension scheme likely to come under acute pressure in coming years.

Public pensions in Spain are exceptionally generous, with workers who retire at 65 after working for 40 years and earning an average wage receiving a pension payment of about 97 percent of their former income.

Early retirement is possible at 60, but pension payments are reduced substantially in this case. Spain’s Socialist government is proposing to raise the retirement age to 67 from 65.

Economists say this measure, announced together with big spending cuts aimed at placating bond markets during the Greek debt crisis, is necessary if Spain’s pension system is not to collapse under the weight of a rapidly aging population.

By 2049, almost one in three people in Spain will be 65 years old or older, double the present level, according to government estimates.

Expenditure for public pensions in 2050 is projected to increase to almost 16 percent of GDP, three percentage points higher than the European Union average, Allianz said.

========== FRANCE ==========

Average exit age: 59.4

Male: 59.5

Female: 59.4

Statutory retirement age: 60

Old-age dependency ratio (population 65+ as percentage of population 15-64)

2010: 26

2060: 45

France’s government, looking to tame a record debt and budget deficit, plans to overhaul the state pensions system. It wants people to work longer before drawing full pensions and is likely to push for a rise in the retirement age, which at 60 is one of the lowest in the leading EU countries.

Like many European countries, France is faced with an aging population, though analysts say demographic change in France will be slightly less severe than elsewhere.

Pensions in France have traditionally been state-centered. However, several reforms, in particular in 2003 by current Prime Minister Francois Fillon, have gradually given a greater role to funded occupational and private pensions.

In net terms, public pension payments replace 80 percent of pre-retirement earnings for an average worker with a 40-year career. However, the replacement ratio is projected to decline substantially, to 66 percent in 2030 and 63 percent in 2050.

France spends 12.4 percent of GDP on pensions, against a euro zone average of 11.1 percent, according to OECD data.

French President Nicolas Sarkozy has said the reform of the pension system would be presented to parliament by early September following talks with employers and unions.

========== BRITAIN ==========

Average exit age: 62.6

Male: 63.6

Female: 61.7

Statutory retirement age

Male: 65

Female: 60

Old-age dependency ratio (population 65+ as percentage of population 15-64):

2010: 25

2060: 42

Britain’s pension system is in the process of being reformed and faces a more favorable demographic development than the European Union as a whole.

The retirement age for women will rise from 60 to 65 by 2020 and will increase to 68 for both sexes by 2046.

The United Kingdom has one of Europe’s most developed occupational pension markets and relies largely on funded pensions, given the low replacement rate of public pensions of about 17 percent of pre-retirement income.

The replacement rate rises to 66 percent gross if pension funds, insurance schemes and tax-favored schemes are included.

Britain’s public pension spending is expected to rise to 8.6 percent of GDP from 6.6 percent between 2005 and 2050, according to Allianz. This is low compared to the firm’s forecast of 12.8 percent in 2050 for the European Union as a whole.

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Factbox: Legal conditions for retirement in Europe