An increase in the standard retirement age has placed a disproportionate burden on the socio-economic groups with low life expectancies.

VS – 09/2021

The long-term life expectancy of 65-year-olds in Germany has risen continuously since reunification. Back in 2018/2020, it was 17.9 years for men, which is a good 3.5 years higher than in 1991/1993. Back in 2018/2020 it was 21.1 years for women and this has now increased by a good 3 years over this period. These values refer to the average number of people within a peer group. However, there are significant differences within a group. Employment that is highly stressful for health or has a low income as well as a low level of education are generally associated with a lower life expectancies.

Differences are particularly pronounced among men

In a study commissioned by the German Social Association, the German Institute for Economic Research examined the inequality in life expectancies between relevant socio-economic groups using the Socio-Economic Panels (SOEP). It focused on the systematic differences in life expectancies based on income, occupational status and health stress.

The empirical results show that the longer life expectancy of 65-year-old men differs considerably and significantly by income, occupational status and health stress. For example, men aged 65 with a low occupational health stress (based on their last job) have a life expectancy of just under 20 years. This drops to around 16 years if the health stress at work was high.

The differences for women are similar in terms of structure, but are significantly lower. The estimated life expectancy of women with low occupational stress is only about two years higher than that of women with occupations that have a high health stress. The average life expectancy is longer than that of men in all occupational stress groups.

These German results concur with those from a large number of international studies. A lower social status or stressful working conditions have a significant impact on life expectancy. This correlation is more pronounced in men than in women.

Groups with different life expectancies are being affected differently by the pension reform proposals.

When interpreting the results, it must be borne in mind that the influencing factors that were considered were all closely interrelated. Therefore the authors of the study point out that causal relationships cannot be mapped. For example, education affects income as well as health-related behaviour and life expectancy through various channels. Poor health can also have repercussions on income. Therefore opportunities and risks seem to cumulate at the individual level, i.e. people with higher education are often found in higher income positions and presumably in less stressful working conditions as well.

However, the authors emphasised that the study made it possible to identify population groups with below or above-average life expectancies and to assess the distributional effect of the pension reform proposals. Groups with different life expectancies are being affected differently by the reforms. According to this, the increase in the standard retirement age is not distribution-neutral, but is disproportionately burdening the groups with systematically lower longer life expectancies. Their pension payments are also being reduced by an above-average percentage due to the shorter pension phase.

The EC's Green Paper on Ageing"*" also addresses the issue of raising the retirement age. Its adjustment to the development of life expectancy is the core proposal for financially stabilising the old-age security systems. However, those groups in Europe with a low social status or those exposed to high health stress at work are bearing most of the social burden of the ageing of society.