Retirement Age under Unequal Longevity and Work Capacity

Jean Hindriks
Additional contact information
Jean Hindriks: Université catholique de Louvain, LIDAM/CORE, Belgium

No 2026020, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Retirement ages are rising in many countries to offset the challenges of population ageing, but people's capacity to work for more years in their later working life is unclear and unequal. If low-skilled workers enter the labour market earlier, work in more arduous jobs, and die earlier, a uniform increase in the statutory retirement age can disproportionately hurt them. This paper shows analytically how a two-sided actuarial adjustment in a PAYG pension system can protect workers retiring early due to arduous careers while preserving incentives to work longer and support financial sustainability. A simulation calibrated to Belgium accounts for income-related differences in premature mortality and longevity to estimate the cost of compensating arduous work and the pension adjustments needed for budget neutrality. The simulations suggest that the pension gain for compensated workers in the lowest income quintile is about three times the pension loss in the highest quintile, with this ratio varying with mortality and longevity gaps.

Keywords: Pension policy; ageing; longevity gap; arduous jobs; retirement age; working life expectancy (search for similar items in EconPapers)
JEL-codes: D63 D64 H55 I38 (search for similar items in EconPapers)
Pages: 22
Date: 2026-09-14
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2026020

Access Statistics for this paper

More papers in LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Alain GILLIS ().