Where Retirees Continue Working

In Europe, about one in five of retirees under 70 continue working during the first six months after retirement. Data from the OECD report Pensions at a Glance shows that there is a striking north-south divide on the continent concerning this topic. More than 40 percent of retirees in the Baltic states and Norway and around one in three in Finland, Iceland and Sweden did so as of the latest data. At the other end of the spectrum are Belgium, France, Greece, Italy and Spain, where only about one in ten or even fewer retirees combine their pension with employment. In Germany, the rate was only slightly higher at 14.3 percent. The data also shows that around one third to half of pensioners changed their role, job or hours when continuing to work. However, this rate was not neccessarily higher in countries where more retirees worked.

The OECD identifies several structural reasons for this divide, for example the fact that many pension systems in Northern Europe are contribution-based and working longer can therefore lead to higher pensions. Furthermore, there are, on average, fewer financial deductions for continued employment on pensions already being paid out, so that combining work and retirement can be comparatively straightforward and also tax-efficient. In Southern Europe, however, pension systems are generally more heavily state-funded and have rigid rules. Working after retirement is unattractive from a tax and/or a legal perspective and it can also lead to pension reductions. In general, early retirement is historically firmly established in these regions.

Furthermore, the individual reasons for continuing to work after retirement vary considerably: The majority of workers in the Baltic states cite financial reasons, while in Norway, the majority say they continue working because they enjoy their jobs. In Finland and Sweden, the reasons are more diverse, including some retirees saying they do so primarily to remain socially integrated.