With an ageing population and the longest life expectancy among all continents, Europe faces a pressing and concrete challenge: how to fund its pension systems.  

Recent efforts to raise the retirement age have met with opposition and fraught political debate, leading to widespread protests in countries like France and Germany. And earlier this year, pensioners took to the streets in Brussels to demand better job security and to oppose the raising of the retirement age. But how can European countries strike a balance between social rights and the viability of pensions? 

Some in Europe are advocating lowering the age of retirement as a way to improve workers’ quality of life and to encourage generational turnover in the workforce. Others argue that this would jeopardise the sustainability of pension systems, which are already weakened by an ageing population and increased life expectancy. A third option, namely combining work and pensions, is widely practised in countries such as Sweden, Estonia and Denmark, where more than 30 per cent of new retirees remain active in the workforce, either part-time or with flexible hours.  

According to a survey by Spain’s national statistics agency, more than 184,000 people aged 50 to 74 continued working in the six months after receiving their first pension payment. This represents 4.9 per cent of all retirees, below the European average of 13 per cent. Likewise, in France and Italy, the figure is below 5 per cent. This disparity highlights the influence of national policies on employment among older people and on financial security in old age, both of which are key factors in the viability of the pension system in the long run.  

What keeps people working?  

In Spain, “More than 37 per cent of pensioners – around 3.3 million people – receive less than 750 euros per month,” according to the Union of Retired and Pensioners of the trade union UGT (UJP-UGT). The body highlights that those who continue working for personal reasons are in the minority. The rest stay in the labour market out of necessity, and because they work in sectors such as retail, cleaning, or caregiving, where pension wages are low.  

According to Spain’s national statistics agency, almost 19 per cent of those who continue to work do so for purely economic reasons, as they need to supplement their income. Meanwhile, around 49 per cent also list other reasons, such as their partner still being in work. In such cases, undeclared or irregular earnings become commonplace. “A decent retirement and access to a contributory pension should be a right, without this implying that people cannot continue working if they wish to do so and meet the legal requirements,” says the UJP-UGT.  

A decent retirement and access to a contributory pension should be a right, without this implying that people cannot continue working if they wish to do so and meet the legal requirements

Civil society groups and labour unions say that other than economic needs, there is often no incentive for older people to stay in work given how hard it is for them to adjust their jobs to their changed capacities. The goal of the pension system, these groups suggest, should be to make sure retirees have a decent quality of life regardless of political decisions on pensions. This is highly important given the implications for citizens’ wellbeing: a study by the Foundation for Applied Economic Studies (Fedea) has found that adding restrictions to retirement can harm people’s health, considerably increasing the risk of dying before the age of 70. 

The motivations for continuing to work after retirement vary significantly between European countries. While in Spain personal reasons – like advancing one’s career or simply keeping busy – are commonly cited as the incentive for continued presence in the labour market, economic necessity is the clear priority in other countries. According to Eurostat data, in Cyprus, Romania, Bulgaria, Croatia, and Latvia, more than half of retirees who continue working do so strictly for economic reasons. These differences reflect not only the different realities of pension systems, but also the structural inequalities that divide Europe in terms of living standards and social protection. 

In Greece, too, many retirees stay in their jobs to supplement insufficient pensions, although much of this activity remains undeclared. In 2023, the government attempted to curb the practice by scrapping the 30-per cent reduction in pensions for those who declared their employment. Retirees who work without declaring their employment will now be penalised with a fine equivalent to one full year of pension payments. However, declaring employment remains unattractive since salaried workers still see an additional 10-per cent deducted from their income. Meanwhile, self-employed workers have even more motivation to stay in the informal economy, as they face pension contributions of up to 50 per cent. 

“Delaying retirement [by choice] should not only be seen as a positive step in terms of reducing public spending, but it should also go hand in hand with improving working conditions for workers,” argues Inmaculada Ruiz, president of the Democratic Union of Pensioners and Retired People (UDP), in Spain. She argues that demoting people over a certain age to lower positions is tantamount to “wasting” senior talent.  

Meanwhile, some civil society groups and labour unions in Spain agree that partial or flexible retirement could promote and “ensure participatory ageing”, especially in a society where value is measured by productivity. They point out that work is an important way of participating in society. In fact, many people feel marginalised when they retire from a social environment that has been part of their routine for years. 

Active retirement: the new norm?  

Some European countries have already put in place policies aimed at encouraging pension-age workers to remain active. According to the Czech labour ministry, around 195,000 retired people, half of them over 67, were still working in the country in 2024. More than 80 per cent of these workers were formally employed, with the rest working on a contract basis or as freelancers.  

At the end of last year, the Czech government introduced reforms to the pension system, which received criticism for a lack of “structural” vision, according to the newspaper Deník Referendum. The proposed reforms include measures to delay the retirement age and cut pension rises, as well as the elimination of social security payments for pensioners who continue to work.  

These incentives were only implemented starting in 2025. Formerly, all workers in Czechia, including pensioners, were required to contribute 6.5 per cent of their gross income to pension insurance. In exchange, pensioners who continued to work received a small addition in their pension: a 0.4-per cent increase in the calculation base for every 360 days worked, which was maintained for life, even after they stopped working. With the new reforms, working pensioners are no longer required to pay the 6.5-per cent contribution, which means they have more money left over each month. For example, a pensioner with a gross income of 20,000 Czech korunas – about 700 euros – can keep an additional 1,300 korunas per month – about 45 euros. The labour ministry estimates that this exemption will cost the public coffers around 4 billion korunas a year – approximately 139 million euros. However, Prague believes that the incentive will encourage more pensioners to continue working, allowing the government to recoup some of the loss through increased tax revenues, for example in income tax or VAT on higher consumption. 

Tackling ageism 

Many believe that an active retirement should at least be an option, especially given increasing life expectancy.  

According to the most recent Eurostat data, Spain has the highest life expectancy in the EU: 84 years, compared to the European average of 81.5 years. Nevertheless, “recruitment processes rarely include profiles over the age of 55,” says the UJP-UGT. “Many CVs are discarded because of age, even before the candidates’ experience is reviewed”.  

Recruitment processes rarely include profiles over the age of 55. Many CVs are discarded because of age, even before the candidates’ experience is reviewed.

UJP-UGT points out that older people are not included in skills retraining programmes because they are considered “too close to retirement”, which cements their exclusion from the world of work. Yet the UDP president believes that such schemes must always remain an option, lest the lack of alternatives make retirement “more a forced destination than a free choice”. 

The real question, in the view of the UDP, is “how we guarantee the right to a dignified retirement for those who want it, and meaningful and dignified employment for those who can and want to remain active”. The union advocates a “transformative social agenda that recognises the value of people at all stages of life”. This would address a wide range of challenges, such as structural poverty, gender inequality, informal employment, and ageism. 

This article was produced as part of the PULSE project, a European initiative to support cross-border journalistic collaborations. It first appeared in Spanish on El Confidencial.  

Translated by Voxeurop