To remove disincentives for older workers to work, the pension premium for drawing
old-age pensions later in life should be raised and pension benefits should not be withdrawn
when pensioners work.
This would also raise subjective wellbeing. The pension reform in
Norway in 2010-11 provides an example for a comprehensive flexible retirement scheme that
does not penalise continued work (OECD, 2013c; OECD, 2014m). In Norway, pension and work
income can be combined without any restrictions and employment income earned by
pensioners generates additional pension rights.
Pension discounts for drawing a pension
before the pensionable age are large enough to fully compensate for the longer period of
expected pension receipt and the shorter contribution record (so-called actuarial neutrality).
Nearly 65% of workers aged 62-66 combine old age pensions with work.