WILL I BE ABLE TO AF­FORD TO RE­TIRE?

The State wants you to work past 65, but em­ploy­ers don’t want old staff. Even if you want to keep work­ing – or can’t af­ford not to – will any­one em­ploy you?

The Irish Times - Weekend Review - - FRONT PAGE - Fiona Red­dan

When Mary Dun­phy was ap­proach­ing the re­tire­ment age of 65 she started look­ing for a new job, but her ef­forts were in vain. On one oc­ca­sion she per­suaded a much younger friend, who had less ex­pe­ri­ence and fewer qual­i­fi­ca­tions, to ap­ply for ad­ver­tised po­si­tions suited to her par­tic­u­lar field at the same time as she did.

“She was in­evitably called to in­ter­view on each oc­ca­sion, when my ap­pli­ca­tions were met with si­lence,” Dun­phy says, as she be­moans the per­cep­tion that some em­ploy­ers seem to have that any­one over 50, “re­gard­less of qual­i­fi­ca­tions and ex­pe­ri­ence, is con­sid­ered to be un­em­ploy­able”.

Un­for­tu­nately, Dun­phy’s ex­pe­ri­ence is be­com­ing all too com­mon. As more peo­ple de­cide to stay in the work­force af­ter the tra­di­tional age of re­tire­ment, whether for per­sonal or fi­nan­cial rea­sons, em­ploy­ers ap­pear un­will­ing to em­brace the trend.

The drive to­wards get­ting peo­ple to work longer is com­ing partly from the State. Af­ter all, it has a keen in­ter­est in keep­ing peo­ple work­ing longer; the long- er they work, the less of a bur­den they will be. With costs of ser­vic­ing the State pensi on ex­pected t o ri se f rom j ust over ¤ 6.5 bil­lion in 2015 to about ¤ 8.7 bil­lion in 2026, it’s a no- brainer.

Al­ready, to save costs, the qual­i­fi­ca­tion age for the State pen­sion has risen, and it will in­crease again, to 67 in 2021 and 68 in 2028. This means that any­one born af­ter 1954 won’t be able to ac­cess the State pen­sion un­til they are 67, and that those born af­ter 1960 will be 68 be­fore they can draw it down.

And the pen­sion age may yet rise even fur­ther. Ear­lier this year, when he was min­is­ter for so­cial pro­tec­tion, Leo Varad­kar mooted that he wanted to push for­ward leg­is­la­tion that would give peo­ple a larger State pen­sion if they stayed in the work­force l onger. Means- test­ing the State pen­sion of ¤ 235 a week has also been floated as an idea.

Now t he Eco­nomic and So­cial Re­search In­sti­tute has sug­gested that 70 should be the new age for the State pen­sion.

We can’t af­ford to stop

Although the State wants peo­ple work­ing later to shore up its fund­ing short­fall, it’s not the only driver. Many of us sim­ply won’t be able to af­ford to stop work­ing.

Just 53 per cent of the pop­u­la­tion has a per­sonal pen­sion, which means that 47 per cent of the work­force will be depend­ing on that State pen­sion of ¤ 235 a week. And even those who do have an­other pen­sion, ei­ther from their job or through a per­sonal re­tire­ment sav­ings ac­count or other struc­ture, prob­a­bly won’t have enough. Data from Ir­ish Life shows that the av­er­age mem­ber of an Ir­ish de­fined con­tri­bu­tion scheme is set to re­tire on a pen­sion of just 17 per cent of their salary.

“The re­al­ity is that some peo­ple re­tir­ing may be in a very vul­ner­a­ble po­si­tion, if they have no pen­sion and on­go­ing fi­nan­cial com­mit­ments,” says Eilis Barry, chief ex­ec­u­tive of Free Le­gal Ad­vice Cen­tres.

The clo­sure of many de­fined- ben­e­fit schemes, which guar­an­teed a third or half of fi­nal salary in re­tire­ment, means that the gen­er­a­tions yet to re­tire won’t be tak­ing too many opera trips to Italy or six- week win­ter hol­i­days in Spain. Early- bird din­ners and trips to Lidl are more likely.

And the long- term trend of lower in­ter­est rates means that a gen­er­a­tion of re­tirees may es­chew an­nu­ity- type prod­ucts, which pay a guar­an­teed in­come for life, in favour of ap­proved re­tire­ment funds, whereby they keep their in­vest­ments vested, and rely on draw­downs for in­come.

But how much of this ap­proved re­tire­ment fund is it safe to spend? And what if mar­ket tur­bu­lence hits your funds badly and you can no longer re­plen­ish them?

De­fined- ben­e­fit, or fi­nal- salary, pen­sions will soon be con­signed to his­tory, leav­ing gen­er­a­tions of work­ers re­ly­ing on their own sav­ings – and, in­creas­ingly, on the State.

Women ‘pe­nalised by the State’

Women, in par­tic­u­lar, are stay­ing in the work­force much l onger, but whether that’s for the plea­sure they get from worki ng or be­cause of i nad­e­quate pen­sion plans is un­clear.

In 1998 just 6,900 women aged 65 or over were work­ing; to­day that fig­ure is al­most 20,000. A study from the in­de­pen­dent think tank Pub­lic Pol­icy last year found that the mean weekly pen­sion in­come of men is ¤ 397 – 58 per cent higher than that of women, at ¤ 252 – and women are far more de­pen­dent on the con­trib­u­tory pen­sion, ac­count­ing for 49 per cent, on av­er­age, of to­tal in­come.

Women are be­ing pe­nalised by the State, Dun­phy be­lieves.

It’s a cu­ri­ous anom­aly of Ire­land’s State pen­sion sys­tem that if you worked in the 1960s, 1970s or 1980s, then stopped to raise a fam­ily be­fore re- en­ter­ing the work­force, you could end up with a smaller pen­sion than if you had started work­ing only in your later years. But for thou­sands of women like Dun­phy this has been their ex­pe­ri­ence.

Dun­phy be­gan her work­ing life in 1966 as a cler­i­cal as­sis­tant in the pub­lic ser­vice. Six years later she got mar­ried, and due to the “dreaded mar­riage ban” ( re­moved in July 1973) she was made re­dun­dant.

Liv­ing in Bal­brig­gan, in north Co Dublin, with her hus­band and three daugh­ters, Dun­phy reared her fam­ily and em­barked on a num­ber of vol­un­tary roles.

But she still har­boured an am­bi­tion of re­turn­ing to the work­force. In 1998, at the age of 49, she did a Fás course, sub­se­quently in­ter­viewed for a po­si­tion as a med­i­cal sec­re­tary in a north Dublin surgery, got the job, re­turned to the work­force, and af­ter a few years be­came practi ce man­ager. She l eft as she was ap- proach­ing 65.

When she reached 65 the De­part­ment of So­cial Pro­tec­tion av­er­aged her PRSI con­tri­bu­tions over 47 years, which meant that a third of her con­trib­u­tory pen­sion was de­ducted.

“If I had never worked un­til 1998 I would be in re­ceipt of a full old- age pen­sion,” she says.

It’s a sit­u­a­tion Dun­phy deems to be deeply un­fair, not­ing that the Home­maker’s Scheme, which al­lows 20 years of time spent out of the work­force to be dis­al­lowed against your PRSI record, was in­tro­duced only in 1994, “so de­lib­er­ately omits all those who were forced to leave work due to the mar­riage bar prior to 1973”.

“Those same women who were re­lied so heav­ily on by the State to give their time post-mar­riage to car­ing du­ties are be­ing pe­nalised heav­ily and shame­lessly by the same State,” she says. In the end re­tire­ment wasn’t for her. De­spite turn­ing 67 last year, Dun­phy was called back to her orig­i­nal po­si­tion at the med­i­cal prac­tice on a short- time ba­sis – and hasn’t left yet.

“I do at 68 find this quite tir­ing, to be hon­est, but am very pleased to feel that I am still ap­pre­ci­ated as be­ing ca­pa­ble of con­tribut­ing to the work­force.”

We’re al­ready work­ing longer

So far so sim­ple, per­haps; the State can’t af­ford for us to re­tire, and we our­selves won’t have saved enough to re­tire, so the so­lu­tion will be to keep work­ing.

But more of us are al­ready work­ing past the tra­di­tional age of re­tire­ment. In less than two decades the num­ber of older peo­ple stay­ing in the work­force has risen sharply. In 1998 just 48,000 peo­ple aged 60- 64 and 34,300 peo­ple over 65 were still work­ing. To­day, ac­cord­ing to the Cen­tral Sta­tis­tics Of­fice, about 112,000 60- to 64- year- olds are still work­ing, and 66,000 peo­ple aged 65 and over are still in the work­force – roughly dou­ble in both age groups.

Where are t hey work­ing? Not f or high- tech multi­na­tion­als in Dublin’s Sil­i­con Docks, nor wait­ing ta­bles in res­tau­rants. Fig­ures from the CSO show that a dis­pro­por­tion­ate num­ber of the over- 65s work in the agri­cul­ture, forestry and fishing sec­tors. These ar­eas ac­count for more than a third of 65- plus work­ers – com­pared with just 5.3 per cent across work­ers of all ages.

So although there has been a shift to­wards work­ing later, it ap­pears to be driven partly by self- em­ployed farm­ers rather than by tra­di­tional or­gan­i­sa­tions em­brac­ing late- in- life work­ers.

40s: ‘I fear be­ing old and poor’

Younger work­ers have very dif­fer­ent ex­pe­ri­ences. Few are as ad­e­quately pre­pared as Aileen Power. Power works in the pen­sions in­dus­try, so you’d ex­pect her to be well pre­pared for re­tire­ment. But she says she started her first pen­sion “by ac­ci­dent” at the ten­der age of j ust 23, when work­ing as a bond dealer in Lon­don.

“It was pure luck. I knew noth­ing about [ pen­sions], but a trusted col­league told me about it,” she says.

So she started match­ing con­tri­bu­tions made by her em­ployer into the scheme, and, when a sub­se­quent move to Paris beck­oned, she also en­sured she was a part of the de­fined- ben­e­fit scheme.

Since then she has been firmly fo­cused on her pen­sion, and, now in her 40s, she al­ready has 15 years of her re­tire­ment “funded ad­e­quately” and 10 years “not aw­ful” – but needs more fund­ing.

It’s true that she can rely on the in­vest­ment ex­per­tise of her col­leagues at Stan­dard Life, but she has also keenly tracked her fund’s per­for­mance.

“I do look at my on­line pen­sion ac­count rea­son­ably reg­u­larly. It would cheer you up that, af­ter a year of sav­ing, you have way more money in your nest egg, and you can see the re­wards of your sav­ing ef­forts.”

She’s also not afraid of chang­ing her in­vest­ments – even if she has made mis­takes along the way.

“I got a fright with the 2008 crash and moved a lot of ad­di­tional vol­un­tary con­tri­bu­tions out of eq­ui­ties into lower- risk cor­po­rate bonds, which was a mis­take, be­cause I missed the big bounce back in value that eq­ui­ties have since en­joyed,” she says.

Power is also will­ing to make some sac­ri­fices now to en­sure that she has a de­cent stan­dard of liv­ing in re­tire­ment.

“I don’t go away for week­ends that of­ten, and I don’t go out for din­ner that of­ten. They are treats and they are planned for. I want to be sure that I have com­fort when I’m older . . . I do think that you have to make sac­ri­fices.

“One of my big­gest fears is to be re­tired, old, cash- strapped and de­pen­dent on other peo­ple,” she says.

In­stead she has her eye on pro­longed pe­ri­ods in the sun in South Africa.

To this end Power is sav­ing hard. For her the “real meat”, or “rocket fuel”, in her pen­sion sav­ings comes from ad­di­tional vol­un­tary con­tri­bu­tions, she says, and she puts aside ¤ 500 a month ( which costs ¤ 300 af­ter tax sav­ings are fac­tored in) into these.

“They’re still the best- kept se­cret. More peo­ple need to em­brace them,” she says.

Early 30s: ‘We don’t trust banks’

John Wilkin­son’s ap­proach is more typ­i­cal of his gen­er­a­tion. He’s 33, and knows he needs to start pro­vid­ing for his re­tire­ment, but is un­der­whelmed by the op­tions avail­able to him.

“I’m stand­ing here with a lit­tle bit of money each month, and I’d love to put it some­where, but I don’t know where to put it,” he says.

For many peo­ple like Wilkin­son, who is cur­rently not pay­ing into a pen­sion plan, a mis­trust of fi­nan­cial institutions and a dis­en­chant­ment with the opaque­ness, in­flex­i­bil­ity and sheer un­cer­tainty of pen­sions are paralysing them.

So- called mil­len­ni­als, many of whom came of age dur­ing the re­ces­sion, are a “lit­tle bit cuter” about where they put their money, he says.

“We don’t have much trust in the banks,” says Wilkin­son. “We’ve all seen peo­ple queu­ing out­side banks in Greece.

“We’re wise to the fact that there’s a lot of mis­trust, and we’ re just too afraid about what to do, but at the same time we’re be­ing very naive that we’re not putting our money any­where.”

It’s not that he hasn’t con­sid­ered a pen-

|I said to a pen­sions ad­viser, ‘Let me clar­ify this. I give you ¤300-¤400 a month, and when I’m 60 you might give it back to me.’ And she said yes

sion. When he took out his mort­gage with one of the banks he was in­vited to have a chat with a pen­sions ad­viser, which he duly did. He wasn’t con­vinced.

“At the end of the con­ver­sa­tion I said, ‘ Let me clar­ify this. I give you ¤ 300-¤ 400 a month, and when I’m 60 you might give it back to me.’ And she said yes.”

The ex­pe­ri­ence left him with lit­tle con­fi­dence in pen­sions.

There is also the po­ten­tial for a pen­sion with his em­ployer, but it’s “some­thing I haven’t re­ally looked into yet”.

There is a lot of pro­cras­ti­na­tion from his peer group, he con­cedes. “I don’t know too many peo­ple who have pen­sions. Some peo­ple are putting money into a pen­sion, but they don’t know how much they’re putting in or how much of a re­turn they’re get­ting.”

The struc­ture of the i ndus­try i s not meet­ing younger peo­ple’s needs, he says.

“We’re an on­line gen­er­a­tion. We want to be able to see things on­line; we want to be able to look at a dash­board and see how well our pen­sion is do­ing. I don’t think there’s re­ally any­thing out there l i ke that.”

Re­tire when you want?

At least Power and Wilkin­son have time on their side. Older work­ers have less choice. Are em­ploy­ers pre­vented from dis­crim­i­nat­ing against older work­ers? Ir­ish law is now gov­erned by a Euro­pean di­rec­tive that means em­ploy­ers can no longer set manda­tory re­tire­ment ages un­less they can ob­jec­tively jus­tify it with a le­git­i­mate aim.

“Em­ploy­ers will have dif­fi­culty jus­ti­fy­ing the com­pul­sory re­tire­ment on the ba­sis of cost alone,” says Eilis Barry. “They will also have prob­lems jus­ti­fy­ing the re­tire­ment if they say they want to make room for younger em­ploy­ees to pro­mote, and then go out and hire some­one ex­ter­nally.”

But le­gal prece­dent shows that em­ploy­ers are jus­ti­fy­ing it.

Back in 2008 a re­tired garda, Mar­tin Don­nell an, lost his case when a court ruled that a manda­tory re­tire­ment age of 60 was nec­es­sary to en­sure that tal­ented younger peo­ple could move through the ranks of the Garda and that restor­ing the age to 65 would cre­ate a block­age at se­nior level.

In­deed, em­ploy­ers still ap­pear to have a pref­er­ence for em­ploy­ees leav­ing the work­force at the age of 65. De­spite the jump in pen­sion age to 66 in 2014, for ex­am­ple, it has been es­ti­mated that only 6 per cent or so of com­pa­nies have re­sponded to the mea­sure by in­creas­ing their own re­tire­ment ages, to keep them in line with en­ti­tle­ment for the State pen­sion.

“The vast ma­jor­ity still have the stan­dard 65 as the es­tab­lished re­tire­ment age, ei­ther in con­trac­tor by cus­tom and prac­tice or by pen­sion ar­range­ments,” says Tony Dono­hoe, head of so­cial and ed­u­ca­tion pol­icy with the em­ployer’s group Ibec., “There is a dis­con­nec­tion be­tween the es­tab­lished cul­tural norms of re­tire­ment and State pen­sion age.”

Where em­ploy­ees do tend to stay on af­ter re­tire­ment, it’s usu­ally via a fixed- term con­tract.

“It gives [ em­ploy­ers] and em­ploy­ees flex­i­bil­ity,” says Dono­hoe. Of course while t his ar­range­ment might s uit em­ploy­ees who have ad­e­quate pen­sion ar­range­ments, it’s un­likely to suit those who have no op­tion but to work and are re­ly­ing on their salary to sur­vive.

In­deed it’s hard to avoid the hard truth that em­ploy­ers sim­ply don’t want older em­ploy­ees. Yes, they’re more ex­pe­ri­enced, but they’re also more ex­pen­sive and are per­ceived to be l ess able for a heavy work­load.

Ro­nan Colleran, chief ex­ec­u­tive of the re­cruit­ment firm Azon, is fre­quently dis­heart­ened by the job prospects for older pro­fes­sion­als.

“It’s a lot harder than me­dia or em­ploy­ers por­tray it to be,” he says. De­spite the many years of ex­pe­ri­ence and qual­i­fi­ca­tions that ap­pli­cants in their 50s and 60s will have for a role, he be­lieves that an “un­con­scious bias” works against can­di­dates of a cer­tain age get­ting a job.

“The ev­i­dence I see out there is that US em­ploy­ers who are based here have a bias to­wards can­di­dates sub- 30 years who can ‘ run hard’, as would be the case in New York or with the tech firms in Sil­i­con Val­ley,” he says, adding, “They don’t nec­es­sar­ily say they have a bias to­wards that, but you can see the trends in who gets picked at the end of the day.”

They want some­one for whom it wouldn’t be their last role, so they “wouldn’t be wind­ing down: they would be wind­ing up,” he says.

“If I post a chief fi­nan­cial of­fi­cer role out there in so­cial me­dia I’ll be in­un­dated straight away with a large pool of can­di­dates in their 50s and 60s who are sit­ting at home and have been look­ing for a job for quite some time,” he says.

Some are will­ing to take a hefty pay cut to se­cure a job, but this doesn’t help ei­ther. Even if an ex­pe­ri­enced can­di­date, who may have been earn­ing ¤ 150,000, of­fers to take on a role for ¤ 80,000-¤ 100,000, it doesn’t tend to im­press em­ploy­ers, Colleran says.

“They’d rather take some­body who’s on ¤60,000 and give them ariseto ¤ 80,000, rather than some­one who’s step­ping down from ¤140,000 to ¤ 80,000.”

Younger can­di­dates, the per­cep­tion goes, will be eas­ier to mould – and to man- age .“There is a gen­eral dis­com­fort around younger peo­ple man­ag­ing older peo­ple,” says Colleran, not­ing that it’s not just those in their 50s and 60s who can be at the end of this dis­crim­i­na­tion.

Colleran con­cedes that it’s “very dis­ap­point­ing” that the ad­vice he has for older peo­ple on the hunt for a job is to “look as young as pos­si­ble in both ap­pear­ance and dress and be as flex­i­ble as pos­si­ble when in­volved in a re­cruit­ment process”.

But it’s get­ting harder and harder to hide your age, with your LinkedIn pro­file likely giv­ing clues about when you were born.

Mid-50s: ‘I never con­sid­ered a pen­sion’

Damien Tighe, a se­rial en­trepreneur from Long­ford, never had a pen­sion plan. He de­cided to in­vest in some­thing else: him­self. “I never con­sid­ered a pen­sion plan. It’ s some­thing you don’t t hink about; it never came into my mind. The way I’ve seen peo­ple in­vest­ing in pen­sions and los­ing their money dur­ing what they call the boom times . . . No, I in­vested in an­other way,” he says.

Self- em­ployed for the past 25 years, Tighe started four com­pa­nies and sold three of them, in­clud­ing an elec­tron­ics im­port ex­port busi­ness based in Shan­non, in Co Clare.

It means that the lack of a pen­sion plan hasn’t hin­dered his fi­nances – for­tu­itous per­haps, given that he is a fa­ther of four and that, with 18- year- old twins, fi­nan­cial re­spon­si­bil­i­ties re­main.

“I was lucky enough,” he says. “I don’t have to worry too much about money.”

Now his busi­ness ven­tures are all about the kick he gets out of it. “It’s got noth­ing to do with money any more. It keeps your mind go­ing. I’ve met peo­ple who re­tired at 66, and they don’t know what to do with them­selves.”

At 57 he moved into hy­dro­pon­ics, and now, at the age of 64, he’s launch­ing his next ven­ture, Life Boost Juices.

“We are what we eat,” says Tighe, adding that he be­lieves his juices can help peo­ple suf­fer­ing from can­cer, cir­rho­sis and de­men­tia.

But work­ing in his 60s means work­ing at a slower pace. “I just pace my­self bet­ter. These days there’s no pres­sure. You en­joy what you’re do­ing, so there’s no great hard­ship in it,” he says. “I re­mem­ber run­ning busi­nesses, and Mon­day morn­ing you’d be wor­ried that you wouldn’t have enough money to pay your staff by Thurs­day.”

To up­skill – “I’m a bit rusty” – Tighe em­barked on the In­ge­nu­ity course in Lim­er­ick, which aims to help en­trepreneurs over 50 to fast- track their busi­nesses.

“When I ran the elec­tron­ics busi­ness in Shan­non, the only way you could com­mu­ni­cate with the United States was by tele­phone or send­ing a fax. Our old fax ma­chine was on a roller, and it took 10 min­utes to send one thing.”

Now he’s au fait with Twit­ter and Face­book, and doesn’t ever en­vis­age the day he stops work­ing. “If I was 75 I’d still be work­ing. You never think of not work­ing; you can’t ba­si­cally these days: you have to keep your mind ac­tive.”

Hir­ing older em­ploy­ees

For it to change, Colleran says, we need more “pos­i­tive sto­ries” about com­pa­nies hir­ing older em­ploy­ees, much like we’ve seen with pa­ter­nity or ma­ter­nity leave.

In­deed it’s a chal­lenge that em­ploy­ers have yet to em­brace. Although many peo­ple will sim­ply not be in a po­si­tion phys­i­cally to work in their late 60s, and will de­pend on job­seeker’s ben­e­fit un­til their State pen­sion kicks in, oth­ers will want, and need, to re­main in the work­force.

But if an em­ployer tells you it’s time to go, your only op­tion i s to ques­tion i ts stance by tak­ing a case to the Work­place Re­la­tions Com­mis­sion.

Will you have the ap­petite for such a move at that hour of your life? If you win, will you be able to re­turn to a com­pany that doesn’t want you? Or will you be able to af­ford not to?

Em­ploy­ers pre­fer to take some­body who’s on ¤60,000, and give them a rise to ¤80,000, not some­one who’s step­ping down from ¤140,000 to ¤80,000

PHO­TO­GRAPHS: DARA MAC DÓNAILL AND TREVOR MCBRIDE

Aileen Power: “One of my big­gest fears is to be re­tired, old, cash-strapped and de­pen­dent on other peo­ple.” Be­low: John Wilkin­son.

Ro­nan Colleran: the re­cruit­ment boss is fre­quently dis­heart­ened by the job prospects for older pro­fes­sion­als

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