Canada: Economists Rekindle Debate about Raising Retirement Age to 70

Following up on recently published research, two economists from McMaster University economists are suggesting that demographic changes require raising the age of eligibility for the Canada Pension Plan to 70. According to press reports, future generations will "suffer the financial consequences" unless these changes are implemented, based on research by Byron G. Spencer and Frank T. Denton, published in 2011 ("Age of Pension Eligibility, Gains in Life Expectancy, and Social Policy").

As presented in the paper:

Canadians are living longer and retiring younger. When combined with the aging of the baby boom generation, that means that the “inactive” portion of the population is increasing and there are concerns about possibly large increases in the burden of support on those who are younger. We model the impact of continued future gains in life expectancy on the size of the population that receives public pension benefits. We pay special attention to possible increases in the age of eligibility and the pension contribution rate that would maintain the publicly financed component of the retirement income security system.

With no changes, by 2035, there will be only two people in the workforce for each person over the age of 65, instead of the four-to-one ratio currently existing, and that would require the contribution rate for CPP to double, from 6.4% to 12.3%.

Source: Toronto Star "Too selfish to retire? Economists urge pushing pension age to 70" (January 26, 2012); Hamilton Spectator "Raise pension age to 70: Mac study" (January 26, 2012)

Energy and Utility Industry: Preparing for Rapidly Changing Workforce Demographics

PricewaterhouseCoopers (PwC) has issued a report on how power and utility companies can best address industry changes within their organizations as they struggle with the awareness that an aging workforce is a significant risk to their operations. In "Change is happening: Is your workforce ready?," PwC looks into four areas in which successful, innovative and forward-thinking power and utility companies are effectively addressing change: developing and retaining leaders, effectively leveraging performance measurement and technology, realigning the organizational structure, and ensuring that the Human Resources (HR) team plays a significant role in overall business strategy.

Among other things, the report (based on a May 2011 survey) states leaders must have the skills to maanage:

• a workforce soon to be challenged with large-scale turnover;
• a workforce, trimmed through retirements and reductions, that is increasingly being asked to accomplish more with resources that are spread thin;
• the interaction between workers in a multigenerational labor force.

According to the survey, more than 60% of respondents rated the task of developing new leaders as difficult. Internal politics and lack of management support remain the greatest obstacles in developing effective new leaders, according to more than 50% of the survey respondents.

Source: PwC Publication Announcement (January 18, 2012)

Europe: Active Aging Year Gets off to Active Start

For Europe, 2012 is "European year of active ageing and solidarity between generations," and it has gotten off to an active start. The opening conference begins January 18, including a presentation by Danish EU Presidency, Eurofound's Donald Storrie, on "Senior citizens on the labour market--the need and potential of reforms."

The European Commission released a Eurobarometer showing that 71% of Europeans are aware that Europe's population is getting older, but only 42% are concerned about this development. Among other things, the Eurobaromter shows that who is considered "young" and "old" varies significantly across countries. Thus, for example, in Malta, Portugal and Sweden, people under 37 years are considered young, while in Cyprus and Greece people are considered young up to the age of 50.

In terms of having a job, only one in three Europeans agrees with the idea that the official retirement age will have to be increased by 2030, even though this is now a clear policy priority in many Member States. However, there is strong support (61%) for the idea that people should be allowed to continue working once they have reached the official retirement age. 53% reject the idea of a compulsory retirement age, but there are huge differences across Member States.

Earlier, on January 9, Eurofound research on "Impact of the recession on age management policies" was published. Authored by Chris van Stolk, the research explores the age management practices of companies in light of restructuring undergone during the recession, looking at policy in relation to the retention of older workers (aged 50 or more) in employment at national and establishment levels in nine European Union states. Among its conclusions:

Countries and establishments consider and discuss age management in different ways. All countries have policies that perform this function in some way, but the comprehensiveness of policies varies. The trajectory of reform differs between countries as does the urgency to target initiatives at older workers. In some cases and especially during the recession, older workers
were often not seen as priority groups. There was greater concern about the employability of younger workers. Given that the crisis affected younger workers disproportionately compared to other age groups, there were often good reasons to prioritise this group rather than older workers.

Source: Eurofound European Year 2012 Updates (January 13, 2012)

United Kingdom: Survey Finds Ageism Embedded in British Society

The UK's Department for Work and Pensions has published a report comparing attitudes between people in their 20s and people aged 70 and over, showing that age-related discrimination and stereotyping remain rooted in British society. According to "Attitudes to Age in Britain 2010-11," "A lack of mutual connection and respect across the age range is likely to foster stereotypes, misperceptions and discrimination. This suggests that different types of support are likely to be required to tackle the problem for different age groups."

Among other things, the report found:

• respondents thought that "youth" ends at 41 and "old age" begins at 59, but this varied by as much as twenty years in relation to the age of the respondent.
  
• while most respondents were accepting of a suitably qualified 30-year-old or 70-year-old boss, three times as many (15% and 5@, respectively) thought that having a 70-year-old boss would be 'unacceptable' compared with having a 30-year-old boss.
  
• respondents that were employed full-time or self-employed were far less likely to have experienced age discrimination than the unemployed working part-time groups.

Source: Department for Work and Pensions Press Release (January 12, 2012)

Despite U.S. Recession, More Workers over 55 Than Ever

An article in The Washington Post reviews Bureau of Labor Statistics data finding that although the recession has "thinned the ranks of other generations in the workforce, more people older than 55 are employed than ever before." Peter Whoriskey reports that while the "reasons for the surge of older workers are complex," experts point to "the growing fear among older Americans that they lack the means to support their retirement needs."

According to BLS data, those 55 and older in the workforce has risen by 3.1 million, or 12%, since the recession started. In addition, there are more people 75 years and older at work. This is not just absolute numbers: the percentage of those 55 and older at work has climbed from 38.9% to 40.3% during the recession.

Among other things noted are the shift from employers provided defined benefit plans to reliance on 401(k) plans, which increases the incentive to continue working in later years.

Source: The Washington Post "Amid downturn, more older Americans employed than ever before" (January 13, 2012)

United Kingdom: Survey Finds Pension Crisis Will Force Older Workers To Work or Earn into Their 70's

According to researchers for Friends Life Limited, a generation of "Wearies"--Working, Entrepreneurial and Active Retirees--"could be forces to continue working into their seventies and beyond due to hardships caused by the looming pensions crisis." Specifically, the study--"Pensions: Crisis and Reforms"--finds that 51% of Britons who are already retired said they would be prepared to do part-time work to boost their pensions, a figure which rises to 75% among those who are yet to retire.

Martin Palmer, head of corporate benefits marketing at Friends Life, said:

"We're expecting the traditional image of the pensioner with slippers and rocking chair to change completely.

"Many will not have saved adequately for a secure retirement and, with years of fiscal austerity taking their toll, by 2020 many people in their seventies simply will not be able to afford to give up working."

Source: Friends Life Ltd. News Release (January 9, 2012)

Study: Effect of Aging Workforce on Workers' Compensation Claims

The National Council on Compensation Insurance, Inc. (NCCI) has released a report examining the potential adverse impact on workers' compensation loss costs as baby boomers postpone retirement and accelerate the aging of the workforce. The paper--"
Workers Compensation and the Aging Workforce" authored by Tanya Restrepo and Harry Shuford--confirms that the share of older workers is increasing but finds, among other things:

• in terms of loss costs per worker, the major difference among age groups occurs between the 25 to 34 and the 35 to 44 age groups, while all groups of workers age 35 to 64 appear to have similar costs per worker;
• the long-standing tenet that younger workers have much higher injury rates is no longer true, so that differences in loss costs by age in recent years primarily reflect differences in severities since differences in frequency by age have virtually disappeared;
• differences in leading types of injuries are a major factor in differences in severity by age, with older workers tending to have more rotator cuff and knee injuries while younger workers have more back and ankle sprains;
• on the indemnity side, higher wages are a key factor leading to higher costs for older workers;and
• for medical, more treatments per claim are a material factor.

Source: National Council on Compensation Insurance, Inc. Research & Outlook (January 4, 2012)

Australia: Study Identifies Barriers Preventing Older Workers from Remaining In or Re-entering in the Workforce

Australia's Minister for Employment Participation, Kate Ellis, has released a report identifying age discrimination, physical illness, injury and disability as key barriers preventing older Australians remaining in or re-entering the workforce. All together, 14 barriers are identified and discussed in "Ageing and the Barriers to Labour Force Participation in Australia," an interim report prepared by the Consultative Forum on Mature Age Participation:

discrimination in employment on the basis of age, care-giving responsibilities, flexibility of employment arrangements, issues around private recruitment firm practices, job search assistance, leisure time trade-off, mental health barriers, mismatch of skills and experience with industry demands, physical illness, injury and disability, re-entry issues barriers of the VLTU (Very Long-Term Unemployed), re-training and up-skilling barriers, superannuation, tax-transfer system, and workplace barriers.

According to one analysis, the report found found that a mature worker’s own health--not workplace barriers--was the biggest barrier preventing them from entering the workforce, staying employed or working beyond retirement age. Thus, while "physical illness, injury and disability" was given a 100% importance rating, workplace barriers--such as poor or difficult workplace conditions or environments and physically demanding occupations--was only given 16.7%.

However, the report also noted that "It is important to note that the barriers presented in this paper are not independent of each other. Rather, many are interrelated and policy responses need to recognise this complex reality. As such, responses to these barriers need to involve many stakeholders, including government, employer organisations, employers, trade unions as well as mature age people."

"The Australian Government recognises that older Australians, with their skills built over a lifetime, make a massive contribution to our economy and our community," Ms Ellis said.

"We want to clear the way for older Australians to be able to stay in the workforce if they want to and this means tackling issues such as age discrimination or looking at how workplaces, equipment and jobs can be modified to better suit older Australians.

Source: Minister for Employment Participation Media Release (December 13, 2011)