Wednesday, August 29, 2012

Research: Eliminating Social Security Taxes on Older Workers Would Encourage Longer Working Lives, Reduce Government Expenses

According to research published by the University of Michigan's Institute for Social Research, eliminating social security payroll taxes starting when workers are 55-years-old would lead to their take-home pay jumping by 10.6%, and they would work 1.5 years longer on average, paying more income taxes, and helping to reduce the Federal deficit. In their article "Consumption, retirement and social security: Evaluating the efficiency of reform that encourages longer careers," in the Journal of Public Economics, University of Michigan economists John Laitner and Dan Silverman explore how tax cuts targeted at older workers would affect the likelihood of working longer and the size of the federal deficit.

According to their abstract, "The estimated magnitude of the change in consumption–expenditure depends importantly on the treatment of consumption by adult children of the household. Simulations indicate that the reform could increase retirement ages one year or more, equivalent variations could average more than $4000 per household, and income tax revenues per household could increase by more than $14,000."

However, in order for the Social Security system to break even,
workers would need to pay about one percent higher payroll taxes a year until age 55. Thus, Laitner said:
Households with a strong preference for very early retirement would pay the slightly higher payroll tax before age 55, but leave the labor force before gaining much from the elimination of the payroll tax after that. Late retirees would, by the same token, be big winners. And the point of the reform, after all, is to encourage work by rewarding it.
Source: Institute for Social Research, University of Michigan Research Release (August 28, 2012)

Thursday, August 23, 2012

Survey: U.S. Employers Want Older Workers To Keep Working

Nearly half of 412 retirement plans sponsors surveyed by BMO Retirement Services expect U.S. companies to benefit from baby boomer employees who prolong their careers past age 65. In addition, only 4% of the firms surveyed believe employees who postpone retirement will be a negative for companies.
"Although some companies will continue to offer buyouts and retirement packages to their older staff, our survey suggests that many businesses will be pleased to retain selected boomer employees," said Todd Perala, Director of Relationship Management at BMO Retirement Services. "There appears to be a growing recognition in corporate America that employees in their sixties possess valuable institutional experience and expertise."
BMO Retirement Services also found that close to a quarter of surveyed employers estimate that the percentage of working boomers who postpone retirement could exceed 50% in the years ahead. Nearly half of respondents predict that more than 30% of boomers will fall into this category.

The plans surveyed have a minimum of $2 million in trust assets and use the BMO Retirement Services recordkeeping platform.

Source: BMO Retirement Services Press Release (August 21, 2012)

Monday, August 20, 2012

New Zealand: Exploring Employer HR Needs and the Silver Tsunami

According to an article from the University of Auckland's Retirement Policy and Research Centre, the retirement of baby boomers in Nez Zealand will leave labor and skill gaps that will need filling and will change the whole process of retirement, but employers able to harness those two challenges will fare better as the "silver tsunami" moves through New Zealand’s age groups. In "A commentary on older workers and some HR issues facing employers," Michael Littlewood examines what is known about New Zealand's older workers, looks at effective retirement ages, makes international comparisons, and explores some of the myths of the silver tsunami.

Among other things, Littlewood writes that not enough is known bout older New Zealanders, as the five yearly Census was last done in 2006. He points out that, as of that time, participation rate of those aged 65 and over had approximately trebled over the 20 years 1986-2006, and that t there were wice as many male "participants" as female in each of several age groups broken out of those over 65 in 2006.
Baby boomers will change everything as they move through their late careers, the transition to retirement and retirement itself. Their numbers alone make that inevitable. They present a human resources’ challenge to employers on at least two grounds: their retirement will leave labour and skill gaps that will need filling, and they will change the whole process of retirement.
Source: Retirement Policy and Research Centre Pension Commentary 2012-4 (August 13, 2012)

Friday, August 17, 2012

United Kingdom: Survey Finds Many Workers Plan To Never Retire; Others Unsure

A survey conducted by Baring Assest Management finds that 44% of non-retired Great Britain adults aged 55 to 64 do not know when they will be able to retire--a higher percentage than the 38% of all non-retired adults who don't know when they will be able to retire. In addition, 12% of the larger pool do not plan to retire at all.

According to Barings, "the results of this year’s survey are in stark contrast to the results from before the financial crisis in 2008. Back then, 100% of non-retired respondents were confident that they would retire, with only 1% saying that they did not know at what age they
would be able to do so."

The survey also finds that of those that plan to retire over the age of 65, 65% are men and 35% are women, suggesting that proportionally men are likely to retire later.

Marino Valensise, Chief Investment Officer at Baring Asset Management commented:
Particularly concerning is the fact that such a huge proportion of people aged 55 – 64 do not know when they will be able to retire. It is likely that these people will have suffered pension losses in recent years due to the financial crisis and therefore need to work longer to recoup funds. With a high number of younger people also failing to save, it is essential that the benefits of a pension are understood to avoid further generations of pension poverty. While financial demands extend beyond saving for retirement, starting to build a pension early in your working life is absolutely key to ensuring a comfortable retirement.
Source: Baring Assest Management Press Release (August 16, 2012)

Monday, August 13, 2012

Study: Labor Force Participation and Increased Participation by Older Workers

The Urban Institute has released a report suggesting that changing age demographics have powerful implications for the shape of the nation's work force, but that "formal models of labor force participation fail to take into account that as the relative supply of younger workers declines, employers will increasingly turn to older workers to meet their demand for labor to provide goods and services." According to "Correcting Labor Supply Projections for Older Workers Could Help Social Security and Economic Reform," by C. Eugene Steuerle and Caleb Quakenbush, increased labor force participation among older workers can add to the solvency of Social Security and the broader federal budget. Policymakers in both the public and private sectors can accommodate this trend by removing barriers that discourage hiring and retaining older workers.
Older workers are to the first half of the 21st century what women were to the last half of the 20th: the largest underused source of labor and human capital in the economy. Few policymakers are taking this extraordinary possibility into account in their reform packages. In an increasingly informationand service-based economy, older workers represent a valuable source of knowledge and experience that employers will tap, especially if Social Security and related economic reforms attempt to channel rather than obstruct these forces.
Source: Urban Institute Publication News (August 10, 2012)

Wednesday, August 08, 2012

United Kingdom: Action Needed To Improve Older Workers Employment Gap

The Resolution Foundation has issued a report suggesting that the United Kingdom may be missing a historic opportunity to boost employment among the over 50s. The UK ranks 15th out of 34 OECD countries, for older workers, lagging the five top countries for by over fifteen percentage points, and closing this gap would mean around 1.5 million more people in work. According to "Unfinished Business: Barriers and opportunities for older workers," authored by Giselle Cory, planned increases in the state pension age are a step in the right direction, but without parallel reforms to tackle the other barriers to older employment, the change will hinder rather than help some older women who are unable to find or keep employment.

In particular, the report identifies six key barriers which need to be overcome to support greater employment amongst the over 50s:
  1. lack of adequate financial incentives to remain in, or return to, work;
  2. significant caring responsibilities;
  3. lack of employment support to move back into work, including training;
  4. limited access to flexible working opportunities
  5. continued prevalent age discrimination; and
  6. poor health.
The UK should attack these because there is a strong desire for longer working lives and a strong need, particularly for those on low to middle incomes. Among other things, most pension saving takes place after age 50 and only one in four is currently saving enough to retire at state pension age; two out of three older workers say they want to continue working up to or past pensionable age; and older women face particular barriers to work, with only 60% of older women employed versus 72% of older men and a large gender pay gap.

Source: Resolution Foundation Press Release (August 8, 2012)