PUSHING OUT THE AGE OF ENTITLEMENT
Ageing populations across much of the world mean working longer before retirement. The French, at least, don’t like it.
When protests erupted in Paris on May 1, a traditional day of union-led marches, in the wake of wildly unpopular changes to France’s retirement age that were brought into law last month, public anger at French President Emmanuel Macron had not eased.
As a building caught fire at Place de la Nation, the French capital turned into a stand-off between protesters and riot police and fireworks and other projectiles were thrown at authorities, who hit back with tear gas.
The estimated 100,000 protesters were fewer in number than in the sweeping demonstrations that erupted earlier this year when a million people stormed the streets of France and brought the country to a standstill after Mr Macron announced he would raise the country’s retirement age from 62 to 64, but the level of anger remained.
To the French, Mr Macron’s move – which was passed last month by the French Constitutional Council – was a very big deal indeed. In fact, it hit right to the heart of French identity.
The French are massively protective of the country’s universal health care and generous social security system. In France, the unspoken rule is that you pay high taxes during your working years, and then you get to retire relatively young.
But Mr Macron didn’t hold up his end of the bargain.
For the French “it was never about the age of retirement,” political scientist Dominique Moïsi said, “but the balance between work and life”.
In the US, a similar battle might be brewing in Washington.
The retirement age for social security, when American workers are eligible for 100 per cent of the benefits they’ve earned, has moved to 67 from 65. (Eligibility for health care coverage under Medicare currently begins at age 65.)
Yet as both programs face funding cuts, one Republican proposal has suggested pushing those ages higher. Republican house leaders are pushing an agenda that anyone born in 1978 or later would not retire until the age of 70, while Republicans also want to raise Medicare’s eligibility age.
During his State of the Union speech earlier this year, President Joe Biden called on Democrats and Republicans to stand together and show Americans they will not cut social security or Medicare.
In the UK, retirement age currently sits at 66, but will be raised to 67 between 2026 and
2028. The country’s state pension age was then expected rise to 68 in the 2040s, but the British Government announced that a decision on whether to bring forward the date when it could rise has been postponed until after the next general election.
Reports in January claimed British ministers planned to bring forward this increase to 2035 – affecting people who are 54 and under today – in response to lobbying by the Treasury hoping to save billions of pounds in state pension payments.
However, with a general election expected in the autumn next year, ministers had feared a potential backlash to the change from middle-aged voters. The French riots also spooked UK officials in favour of the changes.
With Britain in the midst of a cost-of-living crisis, and separate to that, a fuel crisis, which is pushing up home energy costs to an unaffordable degree, retirees have been hit hard by a weekly pension that has remained stagnant at $385 a week.
Meanwhile, in March, Spain’s left-wing government won the backing of unions to reform the nation’s public pension system, in stark contrast with France.
The retirement age in Spain, which has one of Europe’s fastest ageing populations, sits at 65. That won’t change. Instead, the new deal signed off on by its unions will aim to handle a looming boom in the number of retired workers by increasing the social security costs on businesses for higherwage earners.
Union bosses labelled negotiations with the government “historic”.
In Germany, 2023 is a critical year for the German pension system – with more people now leaving the workforce than entering it. To cope, the retirement age is to be increased gradually from 65 years and seven months to reach 67 years by 2029.
Indeed, an ageing population, a dramatic labour shortage and a pension pot shortfall are currently an explosive mix for German economy and society. As such, there has been a growing debate to raise the retirement age to 70 by the German government’s opposition party, which has not gone down well with the general public.
Japan and South Korea are the places where those aged 65 and over are making up the biggest share of the labour force – between 13 and 14 per cent, according to the World Economic Forum.
“It was never about the age of retirement, but the balance between work and life.
Japan’s traditional retirement age has been 60 but, in reality, most people can’t afford to stop work then and the country’s national pension system is under massive pressure to sustain a growing number of elderly while the number of people contributing to the system dwindles. As of 2020, the number of Japanese over 65 reached a record high of 36 million, or 29 per cent of the total population of 125 million, the highest in the world, and the number is climbing.
Dominique Moïsi
In South Korea, retirement age also sits at 60, but the elderly are more likely to live in poverty from lack of pensions or savings. In China, there is also a push to raise the retirement age from 60.
But as people live longer and more Baby Boomers retire, governments look to keep the workforce going longer to pay taxes to keep benefits going.
For many of us, that makes the idea of retirement a significant way off.