Partial Retirement and Pension Policy in Industrialized Countries

By Latulippe, Denis; Turner, John | International Labour Review, January 1, 2000 | Go to article overview

Partial Retirement and Pension Policy in Industrialized Countries


Latulippe, Denis, Turner, John, International Labour Review


Most "regular employees" in industrialized countries work full time until retirement, when they cease working completely. This mode of exit from the labour force results in an abrupt change in workers' time allocation and lifestyle when they move from full-time work to full-time leisure.

Patterns of employment among older workers are gradually changing, however, as a significant minority of people now work part-time before retirement - and even after they receive full pensions. A minority of regular employees move to self-employment, where hours are flexible, or take other jobs after leaving their career job. Some move from full-time to part-time jobs with their career employer, but few employees have this option. Taking a transition job usually requires finding a new employer.1 These transition jobs, commonly called "bridge jobs", often permit workers to reduce their hours by working part-time for a period before taking full retirement. In the United States, about half of these bridge jobs are part-time jobs (Quinn, 1997).

The term "partial retirement" refers to a transition period of part-time work between an employee's career job and retirement which includes payment of either a partial or a full pension. Partial retirement is distinct from the related concept of flexible retirement age, where workers are given a range of ages over which they can retire but where the transition from work to retirement remains abrupt. Another transition pattern is intermittent full-time work at older ages. In this case, an older worker may leave a career job, be out of the labour force for a period, and then return for a period to a full-time job. Although this pattern does not involve part-time work, some government programmes, such as Germany's and Sweden's, consider it to be partial retirement. A further possibility is a period of part-time work preceding retirement without receipt of a pension, though most workers need at least a partial pension to be able to afford a period of part-time work. In any case, this option is not considered here because the focus of this article is on partial retirement as an aspect of pension policy.

Following a brief survey of trends and patterns of employment among older workers, the article examines the advantages, disadvantages and costs of partial retirement. The discussion then turns to policies that affect partial retirement, particularly through its interaction with social security and training. The salient features of partial retirement policies in selected industrialized countries are also reviewed. Finally, a concluding section outlines some policy considerations and suggestions that emerge from the analysis and may inform national policy-making aimed at encouraging or facilitating partial retirement.

Work for older workers

The rate of employment of older workers has decreased significantly over the past few decades. In the advanced industrialized countries, approximately 50 per cent of the male population aged 60 to 64 was economically active in 1990, compared with 82 per cent in 1950. As shown in table 1, the average age of effective retirement - based on the complete cessation of economic activity - declined from over 66 in 1950 to under 62 in 1990 (Latulippe, 1996).

This reduction in the rate of economic activity of older workers has been coupled with the widespread institution of pension plans and an increase in the incidence of part-time work among older workers, both men and women, in most industrialized countries (OECD, 1995b). This partly reflects the increase in the ratio of part-time to total employment at all ages. But in most countries, while the proportion of part-time workers among employed men aged 55-59 is no higher than it is among younger male workers (under 10 per cent), the proportion of 60-64 year-old male workers in part-time employment is higher than the average proportion for all male workers. This also holds true for women, though in most countries part-time work is much more common among women than it is among men. …

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