This is what a study published Wednesday by the Foundation for Applied Economic Studies (Fedea) reveals, which states that this risk of early mortality is “much lower” among workers who have access to partial retirement mechanisms that allow them to reduce their working hours after a certain age.
The Fedea report uses an experience generated by the Spanish reform of 1967, in which the early retirement age was modified according to the date on which individuals began to contribute to the social security system, thus tightening access to this figure for a subset of cohorts of workers.
More specifically, this reform established that those who had started contributing before January 1, 1967 could retire voluntarily from the age of 60, while the others, with a few exceptions, had to wait until the age of 65.
The authors of the study study the effects of the above-mentioned reform on the age of leaving the labour market and those of the latter on mortality at ages close to retirement. Thus, the study pays particular attention to How mortality effects vary across job characteristics and flexibility of the day.
“The results show that Delaying leaving the labor market by one year significantly increases the risk of dying between the ages of 60 and 69.The risk is particularly concentrated in the sectors and especially in the most physically demanding occupations and those subject to a higher level of emotional and mental stress, and is much lower for people who have access to partial retirement mechanisms that allow them to reduce their working hours from work from a certain age,” the report says.
Based on these results, the authors of the study calculate the social cost or benefit of restricting or eliminating the possibility of early retirement and show that “the negative impact on life expectancy exceeds the tax gains.”
Is there an economic cost to the whole thing? Using the value of a quality-adjusted life year at age 60 in Spain, the study indicates that an increase of 0.46 years in age at death translates into a social loss estimated at 8,564 euros for each individual.
On the other hand, Fedea maintains in this study that this reform represents a delay in leaving the labour market which generates, on average, an additional contribution to the pension system and tax revenues of 1,925 euros.
Furthermore, since such a reform leads to premature mortality, Social Security saves 3,228 euros per retiree in terms of retirement. As a result, Fedea defends itself, Social Security obtains a tax gain of 5,213 euros thanks to the reform.
“In summary, the budgetary savings resulting from the postponement of retirement and the reduction in the duration of pension payments do not compensate for the social loss associated with the reduction in life expectancy, suggesting that the reform is not economically beneficial in the broader context of social welfare,” the study concludes.
Retirement policies and health effects
For Fedea, the results of this report highlight the need to “carefully” design the details of retirement policies, taking into account their possible effects on the health of workers.
“It is important, in particular, to take into account the degree of physical, emotional and mental demands of different professions when setting the minimum and legal retirement age, which cannot be the same for everyone,” he argues.
Similarly, it advocates the general introduction of flexible early and partial retirement mechanisms that allow workers to adjust their working hours in the latter part of their professional career.
