Economist predicts impact of pension age freeze

Michael Svarer, an economics professor at Aarhus University, warns of significant consequences for the Danish economy if changes are made to the pension age. He urges careful consideration before altering the 2006 welfare agreement, which gradually increases the retirement age. Prime Minister Mette Frederiksen has suggested halting the age increase, which Svarer says will lead to fewer people working, reduced tax revenue, and a smaller labor supply. The 2006 welfare agreement improved Denmark’s economic health and was designed to secure the country’s welfare future. In 2022, the Pensions Commission suggested it was possible to slow the rise in pension age economically. However, Svarer cautions that following the commission’s models would be costly, requiring budget cuts in other areas like green transition and public services.