Munich Personal RePEc Archive

No country for old men? Increasing the retirement age in the Armed Forces

Hanson, Torbjørn and Lindgren, Petter Y. (2019): No country for old men? Increasing the retirement age in the Armed Forces.

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Abstract

An ageing workforce due to low fertility rates and higher life expectancies challenges modern industrialized economies. To secure economic welfare and the balance of public budgets, governments worldwide implement reforms to increase the retirement age. This trend towards higher retirement age confronts a defense sector that for centuries has been in search of an age structure characterized by ‘youth and vigor’. We study the economic gains to society from increasing the special retirement age for military personnel in the Norwegian Armed Forces. By combining the literatures on pension, personnel, and military economics, we identify mechanisms crucial to the outcome of a special retirement age reform. Monte Carlo simulation is applied to illustrate the potential impact on the economic net gains of uncertain variables. We find that an increase in the retirement age provides substantial net benefits to society, even under fairly negative assumptions about the consequences for retention, motivation and efforts, and the value of elderly personnel in the Armed Forces.

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