New research: the effect of a rising pension age on disability levels

With a future state pension age of 70, the proportion of people unfit for work among future 65- to 69-year olds is likely to be somewhat higher than among the current 60-64 year olds. However, this increase is expected to remain limited.

On the basis of national and international literature, the development of the healthy life expectancy seems to follow the development of the total life expectancy to a considerable extent.

Summary
Disability levels rise with age. Yet, the effect of a rising pension age on disability levels can be substantially mitigated by improvements in health. The rise of the statutory pension age in the Netherlands is by design linked to the rise in life expectancy. Most indicators for healthy life expectancy tend to follow the total life expectancy rather closely. Only life expectancy without chronic diseases lags behind, but this indicator has a relatively weak link with disability levels. A regression analysis shows a significant relationship between the use of medication
and the disability status of all Dutch citizens between the ages of 50 and 62.

This analysis suggests that the disability level among 69-year-old men would rise to approximately 26 percent if there were no improvements in health. Although this would be about 9 percentage points higher than among 64-year-olds, it would still be substantially lower than the level in the year 2000, when 33 percent of the 55- to 64-year-old men received disability benefits. Yet, if the health status of future 69-year-olds improves – as expected – the share using disability benefits may be substantially closer to that of current 64-year-olds.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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