Economic Council urges faster rise in pension age

Faroe Islands’ Economic Council is calling for the pension age to increase more quickly as part of measures to make the economy financially sustainable, KVF reports.

The council said the Faroese economy remains unsustainable when it presented a report on fiscal sustainability on Thursday. The report, titled “The course is not sustainable and must be corrected”, says savings or additional revenue equivalent to around 1.2 billion kroner a year on average will be needed.

The council said this should primarily be achieved by raising the pension age and introducing other technical changes to reduce the treasury’s pension expenses. It also called for a fiscal framework to limit the growth of public spending, reforms to make society less expensive to operate and measures to increase revenue.

Special initiatives should also be introduced to encourage more young people to settle in the Faroe Islands, the council said.

The sustainability challenge is linked to the number of older people growing considerably faster than the working-age population. If the pension age does not rise as life expectancy increases, pensioners will receive public benefits for many more years than they do today.

The council therefore urged political authorities to raise the pension age in line with the increase in people’s life expectancy.

Finance Minister Aksel V. Johannesen, who attended the presentation, said the government would continue with the current approach, under which the pension age rises by six months every five years.