Lowering the retirement age

Henning Ottmer ()
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Henning Ottmer: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: Institute for Evaluation of Labour Market and Education Policy, P O Box 513, SE-751 20 Uppsala, Sweden

No 2026:13, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: This paper examines a 1976 Swedish reform that lowered the normal retirement age (NRA) for public pensions from 67 to 65. The reform implied substantial increases in future pension benefits while leaving contribution rules unchanged. Using administrative data, I find sharp behavioral responses: employment at age 66 fell by 17 percentage points, or 47 percent relative to pre-reform levels, with little effect above the new NRA and modest effects below it. Exploiting variation across occupational pension schemes and reform timing, I use a set of back-of-the-envelope calculations to assess the relative importance of different mechanisms. The patterns are most consistent with behavioral responses and social norms playing a central role, while wealth effects appear to explain roughly one-fifth of the decline. I also provide suggestive evidence on employer-side factors, including automatic termination rules. The reform targeted an older age group than is typical in the literature on retirement ages, at a time when health and work capacity were more limited than today, making the findings relevant for contemporary policy settings in which increases in statutory retirement ages extend to older age.

Keywords: Retirement; Retirement Policies; Social Security; Public Pensions (search for similar items in EconPapers)
JEL-codes: H55 J26 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2026-06-03
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:ifauwp:2026_013

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