samlet årgang - Økonomisk Institut - Københavns Universitet

THE EFFECT OF THE ’92-REFORM OF THE VERP ON RETIREMENT AGE 185
in the VERP program were too small to affect the average retirement age. These changes
were much less far-reaching than the reforms considered in the previous studies.
In part, the deviation could be due to the fact that, unlike previous Danish studies, this
study employs a natural experiment to study retirement behaviour and thereby the resulting
estimates can be thought of as causal responses of retirement to policy changes.
The 1999 changes in VERP implied, among other things, that VERP is moving from
a pay-as-you-go system toward a funded system. In addition, benefits now depend on
the age at entry instead of being reduced as a function of time spent in the program,
benefits are means-tested against income from all other pension schemes for people
aged 60-61 and a tax premium has been introduced for people who are entitled to
early retirement benefits at age 60 but who continue to work at least to the age of 62.
Although these changes were more extensive than the changes conducted in 1992, so
far the effect of this reform on the average retirement age seems to be modest, see Jørgensen
et al. (2005). However, no causal analysis of the effect of this reform has been
conducted and, therefore, the effect is uncertain. What’s more, it seems reasonable
to believe that the effect of this reform might increase in the future. The amount of income
from all other pension schemes is larger among younger generations and, therefore,
the effect of means-testing for people aged 60-61 will presumably increase.
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