What happens to the economic equilibrium if an increase in life expectancy does not bring about change to pension system rules?

European countries have responded differently to the increase in life expectancy: some have raised the retirement age significantly (Sweden, Netherlands, Germany, United Kingdom, to a lesser degree Italy and Spain), while others have not. This leads us to examine what happens in theory to the economic equilibrium if an increase in life expectancy does not bring about change to the rules of the pension system, compared with a situation where the increase in life expectancy leads to an increase in the retirement age. If the retirement age is unchanged, then whether the pension system is balanced by an increase in contributions paid by the working population or by a reduction in the generosity of pensions, consumption by the working population is reduced and cumulative consumption by pensioners over their retirement period is increased (but their consumption per unit of time is reduced). If the contribution rate is stable, income is transferred from the young to the old via an increase in the savings of the young; if the pension replacement rate is stable, the income transfer takes place via the pension system thanks to an increase in the contribution rate of the young . If the retirement age tracks life expectancy, consumption by both young and old increases, thanks to the additional cumulative savings of the young, who work and save for a longer period of time. Not changing the retirement age when life expectancy increases always leads to a transfer of well-being from the young to the old, even if the pension replacement rate is reduced. Raising the retirement age increases the well-being associated with consumption by young and old: of course, the young then work longer.