Working beyond retirement age
WE need look no further than our president, Michael D Higgins, to find a vibrant example of an older person working beyond the traditional retirement age of 65 in Ireland.
At age 70, five years after the majority of employees leave the workforce, he entered the presidential race, won it, and has filled that position with energy and verve.
Now it is widely reported that he is going to go for a second term, a suggestion he has not shot down.
When he took up office in 2011, Higgins, who will be 77 in a few weeks, said he would not run for a second term. But it looks like he might have changed his mind.
“By summer, everyone will know,” he told RTÉ presenter Ryan Tubridy, when he was interviewed by him at Áras an Uachtaráin for his morning radio programme earlier this month.
It is very clear that he has revelled in his role, not least because it feeds his curious philosophical mind and his love of social contact.
“I meet all sorts of people when I’m out and I enjoy that,” he told Tubridy.
Although the freedom to work longer in our later decades is generally a choice left to the self-employed, due to mandatory retirement cut-off points that apply to employees, the landscape is certainly changing as the economic reality of an ageing population, living far longer than our parents did, reveals itself.
In last year’s census, for instance, the over-65 age group saw the largest increase in population since 2011, rising by 102,174 to 637,567, a hike of 19.1%.
Extended working life policies in Ireland have already included the raising of the state pension age to 66, and to 67 in 2021, and 68 in 2028.
Reportedly 5,000 people in 2017 who were forced out of the workforce at 65 years of age, had to bridge the income gap by signing on for the dole, until they while entitled to a State pension a year later.
Unless there are changes around mandatory retirement limits, the problem will be further aggravated as the two further pension age increases in 2021 and 2028 create an even bigger financial chasm for employees to fill.
This so-called pensions time bomb was addressed in a major report from the OECD (Organisation for Economic Cooperation and Development) which found that the average Irish worker’s pension is worth just 34% of their earnings because of the lack of provision beyond the basic State pension.
It found two-thirds of private sector workers have no occupational pension to supplement their State pension and many will face hardship in old age.
To address this, a pension reform plan that will see the introduction of a mandatory “auto-enrolment” system within years, is being planned by the Government. It also includes a review of the State pension which means that employees will get out of their pension what they put in, in the form of PRSI contributions. It is expected that 10 years of PRSI contributions will qualify for the minimum pension, and 30 years for the full pension.
Late last year, Minister for Finance Paschal Donohue got cabinet approval to raise the compulsory retirement age from 65 to 70 for the majority of public sector workers if they choose to do so, though he stressed that they will still be free to retire at the minimum retirement age if they so wish.
The issue of longevity, pensions and income for older people is a hot topic and at the Citizen’s Assembly last year it was heard that, as things stand, the majority of people will rely on the State pension when they retire and that — apart from the richest 30% of pensioners — most of their income will come from social welfare payments.
But should people have a choice regarding mandatory retirement age?
Ita Mangan, who addressed the Citizens Assembly, and is chair of Age & Opportunity, a national organisation that encourages older people to reach their full potential, says yes.
“I think a lot of people would not choose to work beyond mandatory retirement age; the people who would, are in general those who get a lot of work satisfaction,” she says.
“There are a lot of people who can’t wait to retire and they shouldn’t be disadvantaged, in my view, in that expectation and should get a pension at that stage. But I do think the choice should be there to make it available for people to stay on.”
One of the current obstacles to people remaining in the workforce, however, is an attitude of resistance by “the prophets of doom”, she says. “Some people are concerned that if older people stay on in the workforce, it would reduce the job outlets for younger people, but that argument, used against the rights of women 40 years ago, didn’t hold up then. And equal pay and opportunities were introduced and the sky didn’t fall in. There is no reason it will if we do something similar for older people.”
Mangan, who is 66 herself and has specialised in older people’s issues all her career, says she won’t be retiring any time soon. “I am self-employed and have a choice. I don’t have a mandatory retirement age, so while I remain healthy I have no notion of not work- ing. I’m in a fortunate position I know, that I don’t have to work as much as I choose to work, but I recognise that many people aren’t in that position.”
But the extension of the mandatory pension age is clearly on the horizon: “I think it will have to happen — putting it up to 70, or not having one at all — because people are living longer and will need a longer income in retirement and not because anyone, in particular, will want to but because the financial situation will require them to.”
However a one-policy-fitsall approach to that extension is not the solution, says Dr Áine Ní Léime of the Irish Centre for Social Gerontology at NUIG.
In a recently conducted three-year, cross-national study called GENDOWL (Gender Older Workers and the Lifecourse), funded by the European Union, she interviewed 60 older people from different occupations in the US and the same number in Ireland, to get their views on extended working life, specifically the increase in the state pension age.
“The key message that came from it was that everyone wanted choice about working longer,” she says.
“Some pointed out that they had already worked for up to 50 years at age 66 and that was long enough.
“Others felt that they would be unable to continue to work at physically demanding jobs past traditional retirement age and others stated they wanted to enjoy some healthy years in their retirement.”
Instead of introducing an across the board mandatory age, she suggests that it could be modified for some professions, as is the case already for the gardaí, firefighters and the Defence Forces who have provisions for much earlier retirement.
The minimum retirement age is 55 for people who joined the gardaí and Fire Service after April 1, 2004, while the compulsory retirement age for gardaí is 60.
Meanwhile, Maeve McElwee, IBEC director of employer relations, says there are many private employers who would wish to hold on to older more experienced workers: “Many of them see the advantage of keeping people working for longer and I think most people re- cognise that it’s an economic inevitability,” she says.
“We will be fitter and healthier and more capable of staying in the workplace longer; we can still have that retirement time but just in a different proportion — not stretching it out as long.”
McElwee says there have been talks with all the relevant government departments to see what can be done about addressing the retirement age hike.
“The key issue for employers is the ability to have a contractual retirement age and I don’t think you will find many employers who will say ‘we are absolutely wedded to it being 65’. So if it were to move to 68, I think many employers would welcome that opportunity. It’s about having the certainty of saying ‘when you reach a certain age, you retire and there is a process there to see that retirement through’.”
So should there be a choice around mandatory pension age?
“There has to be a reasonable justification as to why any pension age is being set. I think you would have to ask ‘physically how demanding is the work? Intellectually, how demanding is the work? And what are the average capabilities of the average person in these roles? And looking at it from that point of view, while meeting all the same requirements of the European legislation,” she adds.
The reality, however, is that people currently retiring at 65 are regularly living well into their 80s, thanks to the medical, technological and lifestyle advances of our time — compared to a lifespan of 70, when that retirement age was set in the early 20th century.
According to the United Nations World Health Ageing report in 2015, population ageing is set to become one of the most significant social transformations of the 21st century affecting employment, housing, healthcare, infrastructure and social protection and it urges governments to design innovative policies to cope.
It looks like this demographic tsunami is going to push the mandatory pension age issue up the agenda sooner rather than later — whether we have a right to choose or not.
OPTIONS OPEN: President Michael D Higgins will soon be 77 and may yet run for a second term.