Is Swedish pension reform the right medicine for aging Europe?

Following the Second World War, the idea of the life course with distinct periods of education, work, and retirement became popular as a result of the alliance of interests of unions and management, with politicians seizing the opportunity to accommodate them. These "social partners" implemented benefit rules and created practices for using old age and disability to ease the exit of older workers. Although justifiable at the time, now those rules and practices hinder individual and employer incentives to invest in human capital and work environments that enable older workers to remain in the workforce. The article argues that the workforce environment of the coming half-century, which is relevant for persons born around 2000, is much different from that a hundred years earlier, which determined the opportunities for people born around 1900. People are healthier and live much longer and work environments are friendlier. The article argues that it is no longer justifiable to subsidize exit from the workforce around the age of 60 for healthy workers, especially in view of the coming labor shortage in Europe. It also argues that the introduction of the principles of the Swedish NDC pension reform in Europe would provide possibilities for flexible exit from the workforce and remove impediments to labor mobility in Europe, which are embedded in many of Europe's present pension arrangements.