Europe looks at higher retirement age to pay pensions

Europe, facing entitlement deficits of its own, is considering raising the retirement age.

The European Commission released a paper on Wednesday designed to spark debate over how to make sure European countries can afford to fulfill their pension obligations. 

Like in the United States, one option being talked about is increasing the age at which people retire, so that people work longer and contribute more to government pension funds.

“The number of retired people in Europe compared to those financing their pensions is forecast to double by 2060 — the current situation is simply not sustainable,” said Laszlo Andor, the European Union commissioner for employment, social affairs and inclusion. “In addressing this challenge the balance between time spent in work and in retirement needs to be looked at carefully.”

In Europe, low birth rates and longer lifespans are driving pension concerns. While there are four people of working age for each person of retirement age currently in Europe, by 2060 there will be just two workers for each retiree, according to the European Commission green paper.

Last week, House Minority Leader John Boehner (R-Ohio) said concerns about Social Security’s solvency could be allayed by raising the normal retirement age from 67 to 70 and pegging benefit levels to income and price inflation (instead of wage inflation). 

Speaker Nancy Pelosi (D-Calif.) and other House Democrats have criticized Boehner for proposing what could amount to a benefit cut, though some Democrats — including House Majority Leader Steny Hoyer (Md.) — have said that higher retirement ages and means-testing benefits should be considered. The White House fiscal commission, created by President Barack Obama to deal with the country’s debt level, will look at possible changes to Social Security and other entitlements.