Raising the retirement age is always a controversial topic.
Now it’s again being talked about, thanks to an article in The Australian.
Former editor-in-chief of The Economist Bill Emmott wrote the piece, arguing that Western countries risked bankruptcy if they didn’t raise the retirement age to 70.
If you haven’t read the article, Emmott writes that “demographic ageing is the social and economic equivalent of climate change”.
“It is a problem that we all know must be addressed, but which we would rather leave for future generations to solve,” he writes.
“The impulse to put things off for a later day is understandable, given current economic and political troubles, but when it comes to public pensions, procrastination comes at a high cost — even more so than in the case of global warming.
“If developed countries acted rationally, and in the interest of electorates that understood how their tax money is spent, they would set their public pension retirement age at or above 70.”
Emmott uses statistics in the article to back up his claims.
For example, he states that in 1970 the average retirement age for men in France was 67 – equal to the life expectancy at the time.
Now in France, the official retirement age is 65 while the life expectancy is 83.
He points to 13 countries that spend 10% or more of their GDP on the pension each year including Japan, Germany, Poland, Italy and Greece.
“These and other countries are taking money mainly from working taxpayers and giving it to retirees,” Emmott writes.
“With around one-fifth of advanced countries’ populations over 65 (a proportion that is expected eventually to rise to one-third), public pension expenditures will increasingly crowd out other public spending.
“Moreover, reducing public debt levels will become more difficult unless there is a miraculous revival in economic growth, which current pension policies makes less likely every year.”
While you would likely argue that it’s not fair to make older people work longer, Emmott argues that the issue is no about how we treat old people.
“Tax revenues transferred to pensioners could have been invested in infrastructure, education, scientific research, defence, and all the other urgent causes that politicians claim to support,” he writes.
“Pensioners do spend the money they receive, so this revenue isn’t wasted; but it could be better spent to propel stronger economic growth.”
He argues it’s time to rethink the length and pattern of our working lives.
“Any country required by its public pension policy to transfer billions of dollars to citizens for decades-long retirement periods risks bankruptcy or, at best, stagnation,” Emmott writes.
What if you’re an older person and you can’t get a job?
Emmott points the finger at corporate behaviour, writing that believes that companies tend to push out older workers first when they need to cut costs.
“Even companies catering to the “silver market” (elderly consumers) have barely begun to develop more age-friendly employment practices,” he writes.
“The current system is upheld by mythology: the belief that keeping older people in the workforce worsens unemployment.
“In reality, more people earning, consuming, and paying taxes leads to more economic growth. Delaying retirement does not steal jobs; it creates them.”