How does mandatory retirement affect the desire to work beyond retirement age?

What is it about?

Mandatory retirement is a common practice in the Netherlands, but was abolished specifically for national-level civil servants in 2008. No clear differences in preferred and expected retirement ages between national-level civil servants and workers from other sectors were found. There were also no clear differences in the likelihood of expecting to work beyond normal retirement age. A national ban on mandatory retirement would probably not result in many more older workers working past the normal retirement age for any significant amount of time. Furthermore, a national policy reform would have to be integrated in a much broader reform that also changes employment protection legislation and seniority-based wages.

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Photo by David Siglin on Unsplash

Photo by David Siglin on Unsplash

Why is it important?

Mandatory retirement is outlawed in the UK, US, Australia, and other countries, but remains in place in many European countries. This analysis of Dutch data shows that abolishing mandatory retirement in a country with strong employment protection legislation, seniority-based wages, and high quality pensions (i.e., high coverage and high replacement rates), does not lead to a relevant increase in employment rates after normal retirement age. To have such an effect, the abolishment of mandatory retirement should be integrated in a broader policy change that also decreases employment protection and seniority-based wage setting.

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