Category Archives: Retirement and pensions

70 or bust? No! Bring forward workplace changes

How old will you be when you finally retire?

Why wait until 2040 to implement workplace changes?

I seem to be receiving lots of invitations to retirement parties recently. A number of my friends and associates are heading off into the sun or sunset with a variety of fabulous plans: sailing around the Mediterranean to the Baltic, travelling around the world, spending time in summer homes, learning new sports, going back to university, volunteering, spending time with their families and taking up new hobbies. Some simply wanting to potter around in their gardens.

One thing they all have in common was that they are well under the age of 65.  So in some ways it was quite a contrast to see the cover of last week’s Economist ” Pensions: 70 or Bust,” staring out at me from a news stand, suggesting by 2040 for economic reasons, the retirement age will need to be extended to age 70.

Changing retirement age
65 has been considered by many as an aspirational average retirement age and in a number of countries is considered the default age. However, many people like my friends, take steps to retire earlier and it has been quite common for people to retire at 60, or even younger. Recently, particularly since the recession, there have been calls to scrap the default retirement age to allow those who would like (or need) to work longer, to do so. I have come across many who either wish to, or have been forced to, re-enter the workplace as property values and pension pots nose-dived. But in the future individuals may actually be obliged to work those additional years before they will be entitled to any company or state benefits – if they will even exist then at all.

70 or bust
The Economist suggests in its lead issue last week that by 2040, the retirement age in Europe will have to be increased to the age of 70 years. Since 1971, the average life expectancy rate in the advanced countries has risen by 4 – 5 years, and forecasts suggest that until 2050 it will grow by additional three years. People living longer and retiring earlier is not a problem per se , but forecasted labour shortages because of declining birth rates will not allow this.

The article also suggests that this birthrate reduction means that ” in the US, there will be only 2.6 workers per pensioner in 2050, while in France, Germany and Italy – 1.9, 1.6 and 1.5 workers per pensioner, respectively. Countries are already intending to raise the retirement age: in the United States – to 67 years, in the UK – to 68 years” . However The Economist maintains that these measures don’t go far enough.

By raising the retirement age it argues that employees will receive more years at a higher income level, governments will of course profit from further tax revenue, and a later retirement should stimulate a growing economy. However if governments are requiring individuals to stay economically active longer than previously, it means that organisational and employees practises and attitudes will be obliged to accommodate this demographic shift.

Specifically:

  • Discrimination policies will need to be enforced particularly in the areas of recruitment and retraining. A 50-year-old candidate potentially will have 20 more years on the career clock.
  • Workers in jobs requiring certain physical skills and stamina will have to be reassigned to lighter roles if necessary.
  •  Older workers will require cross generational and new technological training.
  • Older employees quite often have spousal and elder care roles. Support will be required.
  •  Flexible work schedules may be required (reduced, compressed, extended work weeks, job sharing, part-time hours, unpaid vacations will all have to be options)
  • Home offices and remote working should be considered.
  •  Re-organization of work and the redesign of jobs could be desirable.
  • Health and wellness initiatives would be beneficial.

Commonalities
It also struck me that some of these proposed measures to support an aging workforce would also be useful to women, but not by 2040. But today. So if organisations are going to be required at some point to implement changes, why not pre-empt a crisis and bring those plans forward 29 years, before we’re all keeping our teeth in jars on our desks and needing ramps for our walkers. If many of those proposals were introduced earlier, they would perhaps stem the exodus of women out of the workforce at critical points in their careers, some of whom never return. Who knows, many might be tempted to have larger families – if managing a career and a modern family simply became easier for everyone.

Those who wish to work longer can do so and those who wish to retire earlier can head off in the direction of their choosing. Then perhaps then some of those gloomy pensioner support ratios might look a little healthier. Or is that too simple?

What do you think?