Survey: Workers More Optimistic about Retirement, but More Contemplating Phased Retirement

The Transamerica Center for Retirement Studies® has released the results of its annual retirement survey, which found increased optimism among workers around the world about improvements in their local economies, but also noted that many workers envision some kind of phased transition into retirement. According to "The Changing Face of Retirement—The Aegon Retirement Readiness Survey (2014)," just 32% of workers surveyed plan to immediately stop working and fully retire. In the United States, this number is just 24%, while in European nations, which which have histories of compulsory retirement, workers are more likely to plan to stop immediately: for example, , 52% in Spain and 51% in France.

Employment and government policy reforms are needed to facilitate this new approach to retirement, yet change is not catching up with worker demand: only 23 percent of workers say their employers facilitate transitioning from full-time to part-time. Even fewer U.S. workers (21 percent) indicate their workplace policies accommodate the transition. In many cases, change in labor and pension laws, as well as a change in cultural norms, are needed to facilitate implementation of a phased retirement program.

The Aegon Retirement Readiness Survey 2014 is a collaboration between the Transamerica Center for Retirement Studies and Aegon. The survey encompasses 16,000 employees and retirees in 15 countries, with separate country reports available for each of them: Brazil, Canada, China, France, Germany, Hungary, India, Japan, the Netherlands, Poland, Spain, Sweden, Turkey, the United Kingdom and the United States. These countries were selected on the basis of their distinctive pension systems, as well as their varying demographic and aging trends.

Source: Transamerica Center for Retirement Studies® News Release (May 29, 2014)

Brookings Issues Report on Retirement Trends in 20 Industrialized Countries: Recession Accelerating Delayed Retirements

A report from the Brookings Institution finds that since Great Recession, the trend toward later retirement in industrialized countries has not only continued, but has accelerated. According to "Impact of the Great Recession on Retirement Trends in Industrialized Countries," by Gary Burtless and Barry Bosworth, when the recession began most rich countries were experiencing an increase in labor force participation rates after age 60. In their paper, they examined whether the downturn slowed or reversed the trend toward higher old-age participation rates, using straightforward time series analysis to test for a break in labor force trends after 2007.

Averaging across all 20 countries in our sample, the pace of labor force participation gains has accelerated since the onset of the Great Recession. As noted, the participation rate of 60-64 year-olds increased at an average rate of 0.4 percentage points a year between 1989 and 2007. Between 2007 and 2012 the participation rate in this age group increased an average of 1.5 percentage points a year. In 12 of the 20 countries, the increase in the trend rate of participation change was statistically significant. The participation rate of 65-69 year-olds increased at an average rate of 0.1 percentage points a year between 1989 and 2007. Since 2007 the participation rate in this age group has increased an average of 0.8 percentage points a year across the sample countries. In 13 of the 20 countries, the rise in the trend rate of participation gain was statistically significant. In the oldest age group, 70-74 year-olds, the trend rate of increase in participation rose from 0.05 percentage points a year between 1989 and 2007 to 0.32 percentage points a year after 2007. In 12 of the 19 sample countries the increase in the pace of participation gain among 70-74 year-olds was statistically significant.

While countries that experienced unusually severe downturns, including Ireland and much of southern Europe, represent exceptions to this generalization, the authors conclude that, on the whole, however, the trend toward later retirement in rich countries has not been reversed as a result of the Great Recession.

According to Robert Samuelson, this study suggests that the "We may be witnessing the last gasp of early retirement" and not just in the United States.

Source: Brookings Institution Paper (December 16, 2013)

OECD Issues Reports on Country Initiatives To Stimulate Employment of Older Workers Since 2005

In a series of country notes, the OECD has evaluated the impact of recent policy reforms and measures to boost job opportunities for older workers in 21 countries which participated in the OECD 2003-05 review of ageing and employment policies. According to the OECD:

The data show a steady increase over the past decade of the employment rate of people aged over 50 in the OECD area, from 55.6% of 50-64 year-olds in 2001 to 61.2% at the end of 2011. At the same time, the effective age at which people retire has increased slightly: for men, from 63.1 in 2001 to 63.9 in 2011 and for women, 61.1 in 2001 to 62.8 in 2011. The data also reveal a striking difference in 2011 between countries in the share of people aged over 60 still working: from 63.4% in Sweden to 14.2% in Hungary (see data for countries below).

In 2006, OECD issued its report "Live Longer, Work Longer" in which it recommended steps to:

• Strengthen financial incentives to carry on working and reducing incentives to retire early;
• Tackle employment barriers on the side of employers, such as increasing awareness of anti-age discrimination laws; and
• Improve the employability of older workers, such as boosting the incentives for job centres to place older unemployed job seekers in work.

More detailed analysis will become available in a chapter of the 2013 Employment Outlook in June 2013. In addition to the 21 country reports linked below, OECD issued a scorecard on older workers  in 34 OECD countries.

• Australia
• Austria
• Belgium (in French)
• Canada (forthcoming)
• Czech Republic
• Denmark
• Finland
• France (in French)
• Germany
• Ireland
• Italy
• Japan
• Korea
• Luxembourg (in French)
• Netherlands
• Norway
• Spain (in French)
• Sweden
• Switzerland (in French)
• United Kingdom
• United States

Source: OECD Ageing and Employment Policies (October 17, 2012)

France: Government Adds Incentives To Increase Employment of Older Workers

In order to build on the momentum created by legislation raising the retirement age in France, French employers are are to get a €2,000 bonus from the government if they hire job-seekers aged over 45, but they also face a surcharge on their wage bill if they have too few apprentices or young trainees. According to an article in The Connexion, the bonus comes on top of €2,000 already paid by the Pôle Emploi job centre for taking on over-26s and an exemption of social charges for taking on over-45s.

The necessity for this can be found in Bruce Crumley's article Time magazine, which recounts Sarkozy's success in raising the retirement age in France by two years, but points out that this law will not succeed unless Sarkozy "persuades French bosses to play along; they have a nasty habit of dumping employees older than 50." As Crumley notes, barely 40% of French people ages 55 to 64 are in the workforce as compared to an OECD average of 54%, and U.S. and British levels of around 60%. Furthermore, he notes, there is an attitude among French employers that older employees are handicaps rather than assets continues to harden, citing a 2007 survey finding that 50% considered 45-to-55-year-old workers already old.

Crumley follows up with remarks from Sorbonne sociology professor Anne-Marie Guillemard, author of "The Challenges of Aging: Age, Employment and Retirement," focusing on how many people approaching 50 are marginalized with busywork by employers, and what might need to be done about that. "Aging employees don't want to stop working, but when they see more than a decade of dead-end activity awaiting them in a place that wants them gone, most accept some sort of agreement terminating their job in exchange for a payout," says Guillemard, and then collect unemployment and other assistance until they reach pension age.

In French

Sources: Time Magazine "France's Labor Paradox" (March 14, 2011); The Connextion "€2,000 for hiring older workers" (March 2, 2011)

France: Pension Reforms Signed into Law

According to press reports, French President Nicolas Sarkozy has signed into law pension reform changes that will gradually raise by two years the minimum retirement age and the fully pensionable retirement age, to 62 and 67, respectively. The signing followed immediately on the approval of those provisions by the Constitutional Council.

The Council's decision and the law are available in the Journal Officiel of November 10, 2010.

As noted in the Washington Post, this change is viewed by some outside France as only a moderate change:

Simon Tilford, chief economist at the Center for European Reform in London, says Sarkozy "had no choice" other than to get the reform through because otherwise France's - and his - credibility would have suffered.

"For anyone outside of France, this looks like a pretty modest move forward," he said. "Other EU countries are moving much much more rapidly" on pension reform.

France has the highest life expectancy in Europe but still one of the lowest retirement ages, prompting Tilford to predict that retirement issues will come up again before markets believe that France has its finances in order.

"A retirement age of 62 is still far far too low," he said.

Sources: Reuters "France's disputed pension reform becomes law" (November 10, 2010); Washington Post "Sarkozy signs the law: French retire at 62, not 60" (November 11, 2010)

France: OECD Data Suggests Keeping Older Workers Working Key To Protecting Pension Systems

An Organization for Economic Co-operation and Development (OECD) look at pensions in France and abroad suggests that making it possible for older workers to keep on working is key to making pension systems more affordable. According to OECD numbers, in the 1950's, in OECD countries, there were around 7 workers on average for every retiree, but that, by 2010, this ratio had fallen to 4 to 1, and that, by 2040, this will be only 2.2 to 1.

Comparing France to other states, OECD says that In Sweden and Switzerland 7 out of 10 people aged over 50 work, while in France the figure is one in two. In addition, the the OECD average for years spent in retirement is just over 18 for men and just under 23 for women, but the French people have the longest retirement--28 years for women and 24 for men.

Source: OECD "Pensions in France and abroad: 7 key indicators" (April 10, 2010)

France: Government Looks to Pension Reform

News reports state that French President Nicolas Sarkozy has said that a bill on reforming the costly pension system would be ready by September, with one option being raising the retirement age. This will be a challenge with much popular opposition being documented.

According to an Ifop poll for newspaper Dimanche Ouest-Francea, 59% of French oppose a rise in the retirement age. In addition, another poll from BVA for broadcaster Canal+ showed that French workers and students on average expect to retire at 62, higher than the current age but earlier than in comparable European economies such as Germany, where the retirement age is 67.

Sources: Reuters "France tackles explosive debate on pension reforms" (February 17, 2010); BBC "Nicolas Sarkozy to introduce French pension reforms" (Feburary 16, 2010)

France: Website for Employers and Employees to Manage Second Half of Careers

In order to help with the retention of employees in the second part of their careers--a major economic and social priority anticipated by employers and employees, Opcalia has launched Fifti, a website for professional and public use to change the social perceptions and changing attitudes of managers and employees as France seeks to raise the number of employees over 55 to 50% by 2010.

Fifti aims to help employees and employers to understand and anticipate the issue of age in the company. By combining the needs and expectations, raising fears and misconceptions, Fifti can open dialogue to understand different parts of the second careers and to implement new practices. Among other things, the website will address skills, training, preparation for retirement, motivation, nutrition, and physical activity of older workers.

Source: Opcalia Press Release (December 12, 2008)

France: Prejudice against Older Workers May Create Business Opportunities

According to a brief note in The Economist, a French employment agency (Experconnect) is attempting to take advantage of the French youth culture to place place retired people in work opportunities.

France has a poor record when it comes to keeping older people in the workforce. The retirement age is 60, not 65 as in most developed countries. In 2005 only 37.8% of people aged 55-64 had jobs, versus 56.8% in Britain and 44.9% in Germany. The main reason is that in the 1980s, when there was high unemployment, the government promoted early retirement. That entrenched the idea that older workers were less productive, says Caroline Young, Experconnect’s founder.

Unlike most employment agencies, however, Experconnect keeps its workers on its own books, so they can carry on drawing their pensions. Accordingly, they tend to work part-time on one-off projects.

Source: The Economist "Jobs for the old " (July 17, 2008)

France: Government Announces New Measures on Employment of Older Workers

Christine Lagarde, Minister of Economy, Industry and Employment, Xavier Bertrand, Minister of Labour, social relations, family and solidarity, and Laurent Wauquiez, Secretary of State for Employment, have announced a series of measures adopted at the end of the consultation with social partners on the employment of older workers. The main objectives are to:

• encourage businesses and industries to conclude agreements to keep or recruit older workers,
• encourage older people to extend their work beyond 60, and
• promote the return of seniors to work.

One of the principal means of pushing the agenda will be to require businesses and industries that have not concluded agreements on age management and employment of older workers by December 31, 2009 to begin paying additional retirement contributions in 2010. In addition, the ministers stated that age should no longer be a reason for an employer to terminate the employment contract.

To encourage workers to stay in the workforce, the measures call for allowing
cumulative employment and retirement without restriction at age 60 if on full retirement and at age 65 in all cases and for the elimination of the six-month waiting period for resuming work with the same employer.

Source: Ministère de l'Économie, de l'Industrie et de l'Emploi Press Release (June 26, 2008)0

France: Boomers Want To Retire at Normal Retirement Age

A survey commissioned by the Union Mutualiste Retraite (UMR) focusing on how employees aged 45 and over are thinking about their retirement, these baby boomers are seen asworried and not necessarily very well organized or informed: 80% say they feel worried about their retirement and 27% said they were very worried. However, regardless of how ready they are financially, most employees aged 45 and over do not want to work more to earn more after retirement.

According to UMR, the majority of boomers (60%) would continue to work for the minimum number of years required by law to receive a full pension. And many of the others, want to work less than that, even if it means getting less that a full pension.

Source: Union Mutualiste Retraite Press Release (June 17, 2008)

France: Pension Reform Proposals Aim to Retain More Older Workers

Pension reform proposals in France include measures to raise the number of older people in the workforce, including threatening companies with penalties if they do not increase their number of staff aged 55 to 64 and requiring employees to work 41 years, not 40, to qualify for a full state pension.

According to earlier pronouncements from the Labor Ministry, the Government's aim in building on the 2003 pension reforms is, among other things, to increase the level of employment of older people and to promote freedom of choice of everyone to prepare his retirement.

According to a March 25 letter from Minister Xavier Bertrand, the Ministry has just begun a phase of dialogue with all stakeholders and to solicit proposals from the social partners on various aspects of pension reform. At the end of this first phase of consultation, a policy document will be made public, a document on the basis of which discussions will continue with the social partners.

Sources: BBC News " France says 'take on older staff'" (April 28, 2008); Ministrère du Travail, des Relations sociales, de la Famille et de la Solidarité Dossiers (April 4, 2008)

Survey: Talent Gap Widens as Workforce Ages in G7 Countries

According to a study conducted by Towers-Perrin on behalf of AARP, as the number of workers reaching traditional retirement years increase in the G7 countries, the marketplace is experiencing a decline in the number of skilled younger workers available to fill in the ranks of those retiring. Thus, suggests AARP, employers must end age discrimination in the workplace if countries and employers are to be best positioned to thrive in the global economy tomorrow.

The study--International Profit from Experience--was released in advance of a conference on the same sponsored by AARP, in partnership with the European Commission, the Business Council for the United Nations and Nikkei. Among the survey's key findings:

• Age discrimination is the single largest barrier for those 50+ who want to continue working past their anticipated retirement age, with at least 60% of employees 50+ in each G7 country viewing age discrimination as the primary barrier to securing new jobs;
• Older workers in the G7 countries want to continue to work on average an additional 5 years;
• Surges of immigration and productivity that might offset the anticipated decline in skilled workers are unlikely to occur; and
• Allowing employees to continue working past their traditional retirement age will not only allow older workers to remain in their careers and stay active, but will have a positive impact on an employer’s bottom line.

Line Vreven, Director of AARP International, says that “While the survey clearly identifies the talent gaps emerging within G7 countries, the responses by employers do not sufficiently address this challenge.” In addition, those "nations working to actively retain older workers and are providing incentives, rather than deterrents, to their continued employment, will reap economic gain in the long-run.”

An executive summary of the full 124-page report is also available.

Source: AARP Press Release (September 25, 2007)