Is gradual retirement answer to the crisis?
Introducing a more flexible attitude to quitting work could have valuable social, emotional and economic benefits, writes Brendan O’Connor
WE’LL be lowering the retirement age to 60 if we keep going like this. The major parties, apparently blindsided by the issue, are struggling to chase the more leftist parties on appeasing the mythical grey vote.
Grey voters, as everyone knows, are deeply committed voters, many of whom have time on their hands to get behind an issue, so it is seen as folly to get on the wrong side of them.
Fine Gael and Labour both had a hand in the raising of the pension age originally, though there have been vague mutterings in recent days of essentially blaming the Troika for it. Labour is now leading the charge to freeze the pension age.
While there was confusion, even within the parties themselves, about their responses to the issue, there seems to be a general thrust now towards raising the pension age on one hand, while offering some form of transition payment on the other hand, which would essentially be the pension.
There may be commissions to look into it, the move to a pension age of 67 next year will probably be put on ice, while simultaneously most people agree that we can’t afford our current pensions regime.
It is, depending on how you look at it, populism of the worst kind, driven by the left, or else it represents the major parties listening to legitimate concerns from the people who have got up early all their lives and made this country what it is.
One idea that hasn’t been aired in the past week, which could provide somewhat of an answer to this, is a concept that’s been tried with varying degrees of success in Japan and around Europe, and of course, naturally, in Sweden.
Call it gradual retirement, phased retirement or just old fashioned semi-retirement, but the idea of people not facing a cliff edge when they reach the end of their working life, but gradually transitioning to less work, is an idea that’s been knocking around for a while, and was actually discussed 13 years ago in a green paper on pensions in Ireland, which had a chapter on “Work Flexibility in older age: a new approach to retirement”.
There has been much discussion in the last week about how our current pensions regime is a relic of a bygone era. The pension age of 65, we are told, dates from an era when most people didn’t live very long after 65. And indeed, the pension age in Ireland used to be 70 in relatively recent years. We can’t afford, we are told, to keep paying people not to work for 20 and 30 years at the end of their lives. But for all that, we have rarely discussed any kind of “new approach to retirement”.
Gradual retirement has many obvious benefits for potential retirees. While many people enjoy an active retirement, fulfil long-held dreams, pursue passion projects and get a new lease of life from grandchildren, abrupt retirement at 65, 66 or even 67 doesn’t suit everyone.
We all know retired people who lose their purpose in life when they retire. We all know people whose self-image revolved around their job, which was their main role in life, central to their narrative of who they are. We all know people who bore of golf or flower arranging very quickly. We all know people who start heading up to the local a bit earlier every day. Many people lose a sense of meaning in their life, find it emotionally challenging, and lose much of their social interaction when they retire.
Equally many people feel by the time they get to 65 or 66 that they’ve worked hard, they’ve had enough, and they deserve to step off the treadmill. Phased retirement can offer, in some senses, the best of both worlds. Older people who are allowed to work in a more flexible fashion, possibly part-time, get to maintain a sense of purpose, get the mental challenge and the social and emotional benefits of still being useful, while also getting to step back a bit and maybe having more time to pursue other interests and to live a little.
Phased retirement can also have benefits for companies. The wisdom and skills and experience of older workers can be valuable to companies and it can help with the training and mentoring of younger employees. It can mean companies minimise the brain drain that can come from losing that bank of skills and experience that older workers have, while equally opening up new roles for a new generation.
Gradual retirement does not need to mean maintaining your current job but just doing less of it. Phased retirement could also involve people taking a so-called “bridge job”, one last act for them, a different role somewhere that means less work or more suitable work for their age group, but which utilises their skills and experience.
Equally, some people might choose to pursue that dream of finally setting up their own business. In Japan, many employees were allowed to move from primary to secondary jobs, or were loaned out to a company subsidiary to take on a lower-commitment job.
Phased retirement could also have huge economic benefits for society at large. It means that older people might choose to work for a few extra years, and might choose to avail of no pension or a lower, partial pension for that time. It also means they might choose to contribute more economically for more years.
But we have never really seriously tried to make phased retirement attractive to people. There are many practical reasons why someone might not choose gradual retirement in a company.
If your pension is based on your final earnings, you’re going to want to exit the workplace at your peak earnings.
Neither is there a huge culture of facilitating part-time work in many companies.
This can be down to the difficulty of making certain jobs suitable for stepped-back working, or a concern that if such an option is made available to older people everyone would be looking for it.
While there can be more of a culture of part-time working for women, men are less likely to opt for it or to have it available to them.
There was a partial pension scheme introduced in Sweden in the 1970s and crucial to its success was that there was a culture of part-time working already in Sweden.
We would need to have a major conversation between business and government about creating an environment where phased retirement might work.
As we’ve seen in some recent high-profile cases, many people take grave exception to being forced to retire at a particular point.
Indeed, people who are forced to stop working when they don’t feel they are ready, are likely to suffer more, both financially and psychologically, than other retirees.
Research consistently shows that many older people would like to work for longer, but would prefer to have more control over how much they work.
Phased retirement is perhaps an idea whose time has come in Ireland. But it would require a proper conversation, not a kneejerk one conducted in a heat of an election where everyone is trying to out-promise the next person in an attempt to woo every sectoral interest.
‘Fine Gael and Labour both had a hand in the raising of the pension age’