The deterioration of the labour market in all OECD countries since the oil-price shock of 1973 has brought with it a massive increase in early retirement. This is a result not only of discouraged, older job-seekers leaving the labour market for the more socially-acceptable “alternative role” of early retiree, or of persons eligible for disability benefits finding themselves forced by lack of work to exercise that option, but also of conscious policies by governments, backed by employers and trade unions. Although this paper is concerned primarily with the question of early retirement, it seeks to generalise lessons drawn from its study to the question of raising the age of retirement and the question of promoting gradual retirement. The next section explains the concepts of ‘instrument substitution’ and ‘cost shifting’ and considers in more detail, with reference to recent experience in the Federal Republic of Germany of “public private cost shifting”. The following section looks at the implications of instrument substitution and cost shifting for efforts to curb early retirement, to lift the pension age and to institute gradual retirement. The concluding section comprises some more general comments.