Thursday, June 21, 2018

United Kingdom: Survey Finds 72% of Workers Working Past Retirement Age

The proportion of United Kingdom employees who say they will work beyond the age of 65 remains at 72% for the second year running--but significantly higher than in 2016 (67%) and 2015 (61%)--according to the latest research from Canada Life. In addition, the survey finds:
  • 47% of UK employees will be older than 70 before they retire, up from 37% in 2017
  • Those at the peak of their financial responsibilities aged 35-44 are feeling the squeeze the most, with 27% expecting to retire after their 75th birthday
  • 35% believe that older workers will have to learn new skills or retrain to remain employed but 41% think that a mix of older and younger employees creates a wider range of skills to draw on
Paul Avis, Marketing Director of Canada Life Group Insurance, comments:
The combination of an increase in the cost of living, poor returns on savings and inflation continue to impact the UK’s retirement plans. This is the second year in a row that our findings indicate that more than 70% of the country’s workforce expect to work beyond the age of 65, and there is no sign that this trend will slow down any time soon.

But even as an older workforce becomes more common, the stigma surrounding older workers is proving hard to shake. Employers now have the opportunity to capitalise on the skills of two or even three generations, but only if they address potential generational divides and the changing needs of their employees.

Source: Canada Life News Release (June 20, 2018)

Tuesday, June 19, 2018

Iceland, New Zealand and Israel are Leaders in Boosting Employment Rates among Older Workers: PwC Reports

PwC has released it 2018 Golden Age Index and reports that Iceland, New Zealand and Israel are the leaders in boosting employment rates among older workers. In addition, the report finds that extending people’s working lives to reflect the aging of their populations could release massive untapped value for their economies to the tune of US$3.5 trillion across the OECD as a whole in the long run.
Current employment rates for workers aged 55-64 vary dramatically across the OECD, from 84% in Iceland and 78% in New Zealand to 38% in Greece and 34% in Turkey.

For example, increasing the over-55 employment rate to New Zealand levels could deliver a long-run economic boost worth around US$815 billion in the US, US$406 billion in France and US$123 billion in Japan - with the total potential gain across the OECD adding up to around US$3.5 trillion. This economic uplift would be combined with significant social and health benefits from older people leading more active lives and having higher self-worth through continuing to work where they wish to do so.
John Hawksworth, Chief Economist at PwC UK, comments PwC thinks "older workers should be encouraged and supported to remain in the workforce for longer. This would increase GDP, consumer spending power and tax revenues, while also helping to improve the health and wellbeing of older people by keeping them mentally and physically active." In particular, PwC notes that "[s]uccessful policy measures include increasing the retirement age, supporting flexible working, improving the flexibility of pensions, and providing further training and support help older workers become 'digital adopters.'"
The findings from [PwC's rigorous statistical analysis of the underlying drivers of higher employment rates for older workers across 35 OECD countries] include that financial incentives like pension policy and family benefits can influence people’s decision to stay employed, and that longer life expectancy is associated with longer working lives. The study also shows that flexible working and partial retirement options can pay dividends for employers, as can redesign of factories, offices and roles to meet the changing needs and preferences of older workers.
The Golden Age Index provides additional details for each country evaluated. For example, looking at the United Kingdom, PwC points out that:
  • UK ranks 21st out of 35 countries in PwC’s Golden Age Index
  • Up to 23% of UK jobs currently held by 55+ workers could be displaced by automation technology in the next decade
  • South East of England has highest older worker employment rate in the UK at 75.3% compared to 63.2% in Northern Ireland
Sources: PwC News Release (June 18, 2018); PwC UK News Release (June 18, 2018)

Thursday, June 14, 2018

Russia Raising Retirement Age to 65 for Men and 63 for Women

According to published reports, the Russian government has approved a bill on a gradual increase of the retirement age to 65 years for men and 63 years for women. Currently, retirement age is 60 for men, and 55 for women.
According to Russian Prime Minister Dmitry Medvedev, the bill "proposes to introduce a sufficiently long transition period - to start from 2019 to gradually reach retirement age of 65 for men in 2028 and 63 years for women in 2034."
Reuters states that "[t]he government is likely to introduce legislation into the State Duma, the lower house of parliament, in the near future to enact the VAT and retirement age changes," and that "[i]t is rare for the Duma, which is controlled by the ruling party, United Russia, to oppose the government on major policy initiatives."

Sources: Reuters "Russia, on quest for budget savings, to raise retirement age" (June 14, 2018); Tass "Russian government approves bill to raise retirement age" (June 14, 2018); CNBC "Russian government plans VAT hike and raising the retirement age" (June 14, 2018);

Wednesday, June 06, 2018

Study Finds Women Retiring Early Creates Gender Gap in Social Security Wealth

The National Bureau of Economic Research has released a study showing that the the pattern of women tending to marry men who are older and then retiring at the same time as their husbands contributes to a substantial gender gap in Social Security wealth [SSW].

In "The Return to Work and Women's Employment Decisions" (NBER Working Paper No. 24429), Nicole Maestas reports that "the opportunity cost of retirement—-in terms of foregone potential earnings and accruals to Social Security wealth—-may be larger for married women than for their husbands," and that using the Health and Retirement Study (HRS), she finds "evidence that the returns to additional work beyond mid-life are greater for married women than for married men. The potential gain in Social Security wealth alone is enough to place married women on nearly equal footing with married men in terms of Social Security wealth at age 70."
For both female cohorts, real earnings increased until age 55 and began to decline at age 57. Men's earnings, on the other hand, continuously decreased from ages 51 to 61. In addition, women's earnings increased by 31 percent across cohorts, but men's earnings increased only 10 percent. So the gender earnings gap shrinks as individuals age into retirement.

For both cohorts, women were more likely than men to retire "early" — before age 62 — or move from full- to part-time employment. In the boomer cohort, 47 percent of women retired or reduced work early, but only 41 percent of men did so.

...

When ranked by the amount of additional SSW they would receive if they worked to age 70, married women in the top quartile would gain an average of over $36,000, compared with only $1,300 for those in the bottom quartile. Despite these potentially significant differences in the financial consequences of early retirement, Maestas finds that the early retirement rate among women with a lot to gain from continued work is comparable to that for women with relatively little potential gain. "This suggests that individuals do not factor these potential gains into their employment decisions, and it raises the question of whether individuals are able to correctly assess the opportunity costs associated with reducing work effort before age 70."

Source: NBER Digest "Married Women Who Retire Early May Forfeit Social Security Wealth" (June 2018)

Tuesday, June 05, 2018

Switzerland: Survey Finds Majority of Employees Retiring before Reaching Retirement Age

According to Swissinfo.ch, the NZZ am Sonntag newspaper has reported that 58% of Swiss employees stop working before the official retirement age in Switzerland. The survey conducted by the Swisscanto pension fund specialist found that only 32% continue to retirement age (65 for men and 64 for women), and just 10% carry on working beyond that age.
NZZ am Sonntag said the high number of people taking early retirement is rather surprising. The trend goes against current political thinking, which is towards raising the retirement age because of funding problems in the state pension scheme. According to the survey, raising the retirement age to over 65 is likely to continue meeting strong public resistance.
...
Swisscanto board member René Raths also expressed concern to the newspaper. He says that longer life expectancy means longer retirement, and that in 2035, there will be only 2.3 working people funding one pensioner, compared with nearly 4 at present.

Source: Swissinfo.ch "Majority of Swiss opt for early retirement, says survey" (June 3, 2018)

Monday, June 04, 2018

Survey of U.S. Workers in Gig Economy Looks to Effect on Retirement

A Betterment survey report has been issued on the impact of the gig economy on the future of retirement in the United States. "Gig Economy Workers and the Future of Retirement" highlights data from a survey of 1,000 U.S. respondents, 25 years and older and working in the gig economy. According to the report, several themes emerged regarding two categories of workers: "full-time giggers"--workers who rely primarily on the gig economy for their income, and "side-hustlers"--individuals who rely on a traditional full-time job as their main source of income but supplement with a side gig economy job.

Most significantly, Betterment reports that for many of those surveyed, the gig economy is replacing their retirement plan:
  • 16% plan to depend on gig economy jobs to supplement their retirement;
  • 12% of side-hustlers will keep a side gig job as their main source of income after retiring from their traditional nine-to-five; and
  • 1 in 5 full-time giggers say they’ll continue to pick up incremental work in the gig economy as their main source of income following “retirement”
In addition, Betterment reports that 81% of gig economy workers say they can’t afford to prioritize saving for retirement. In fact, more than half of gig economy workers "turn to this new way of working for financial reasons, not just for the freedom and flexibility it provides." Source: Betterment "Survey: Future Retirees May Rely More on the Gig Economy" (May 18, 2018)

United Kingdom: Growing Pay Gap between Younger and Older Workers

The Trades Union Congress has released a report finding that, in the United Kingdom, the "generational pay gap"--the gap between the average earnings of 21-30 year-olds and 31-64 year-olds working an average 40-hour week--has increased in real terms from £3,140 in 1998 to £5,884 in 2017. In "Stuck at the start: Young workers' impressions of pay and progression," the TUC finds that
  1. young workers are disproportionately affected by wage stagnation
  2. young workers are concentrated in low-paying jobs
  3. young workers do not have access to the skills development to get on at work
  4. young workers are especially vulnerable to insecure work
  5. young workers have no voice at work
The report also found that the overrepresentation of today’s young workers in certain industries has worsened the generational pay gap: "Jobs growth has been generally slower for younger workers than for older workers in the past two decades, but the growth that has taken place has been heavily concentrated in five industries: education; health and social care; hotels and hospitality; real estate, renting and business activities; and wholesale and retail."

Beyond raising the minimum wage, the TUC recommends that the government, among other things, (1) develop a strategy to improve wages, productivity, skills development and conditions in low-paid industries, by setting up modern wages councils that can require employers to act; and (2) give all workers, including young workers, the right to time off for training. It also recommends that employers "create genuinely flexible, well-paid, part-time work at all levels of an organisation, particularly for supervisory and managerial roles, so that parents do not have to give up spending quality time with family just to make ends meet."

Source: Trades Union Congress Press Release (June 4, 2018)