Study: Looking at Rising Retirement Ages in United States

The Center for Retirement Research at Boston College has released an issue brief discussing the rise in retirement ages for both men and women aince the mid-1990's. According to "What Is the Average Retirement Age?" by Alicia H. Munnell, the average retirement age in the United States has risen from 62 to 64 for men, and from 60 to 62 for women.

According to Munnell, factors leading to the rising retirement ages include:

• changing incentives in Social Security and employer pensions;
• better education and health coupled with less strenuous jobs; and
• the decline in retiree health insurance.

In addition, she notes that more older women are working today because more of them started working when younger. In addition, the factors leading to the increased retirement ages suggest the trend toward later retirement will continue but risks remain, such as the move away from career employment.

Source: Center for Retirement Research at Boston College Press Release (August 16, 2011)

Research: Age Diversity in the Workplace as Divisive

According to a study presented at the annual meeting of the Academy of Management, in age-diverse companies, employees experience more anger, fear, and disgust, and therefore they consider more often changing their jobs and contribute less to the performance of the company as a whole. The study--“When and why age diversity matters for organizations: A study on the role of affective processes"--was authored by Florian Kunze of the University of St. Gallen, in Switzerland, and Jochen Menges of Cambridge University. Specifically, the authors say:

"In contrast to several studies on the individual level that portray emotion suppression as a demanding and effortful strategy with high social costs, we showed that emotion suppression is an important response pattern for social interactions in age-diverse organizations. This counterintuitive finding suggests that in age-diverse companies these social benefits outweigh, from an organizational-level perspective, the individual costs of emotion suppression."

The study recommends that managers in highly age-diverse companies implement assessment tools such as employee opinion surveys, analyses of employee grievances, or focus group interviews, and that they invest in emotion-regulation capacities, such as through exercises in emotional control or through role-playing dealing with such potentially problematic situations as younger workers' supervising older subordinates.

A Financial Times article on the presentation reports that the authors suggest two reasons for their findings: (1) people bond better with workers their own age, and (2) in mixed age groups, old people get upset when younger ones are promoted over their heads, while young people get upset when an old person is sitting it out in a job, and preventing their advancement.

Sources: Academy of Management Press Release (August 2011); Financial Times "Age-old bonds make the office tick" (August 14, 2011)

Research Study Finds Disparity Between Effects of Arthritis on Blue Collar and White Collar Older Workers

White-collar workers have a higher overall health-related quality of life than do other workers, and suffer fewer quality-adjusted life years (QALYs) lost to arthritis at all ages, according to research published in the September 2012 issue of the American Journal of Public Health. Thus, for example, while 65-year-old white-collar workers without arthritis look forward to 17 QALYs of future life, blue-collar workers with arthritis experience only 11, and are much less likely to remain in the workforce than are those in service, farming, or white-collar jobs.

In "Arthritis, Occupational Class, and the Aging US Workforce," Alberto Cabán-Martinez, DO, at the time of the study a professor in the department of epidemiology and public health at the University of Miami Miller School of Medicine in Florida, and the other authors note that this is a signficant workplace issue because it is often the lower-income individuals who, for financial reasons, need to remain in the workforce longer, despite greater health problems than white-collar workers. Among other things, the research found that, in workers aged 65 and older, approximately 67% of farmers, 58% of those in service, 51% in white-collar occupations, and 47% of those in blue-collar jobs had arthritis.

Dr. Cabán-Martinez says it is important to use studies like this to reinforce the need for workforce change. The authors suggest improving disability and unemployment insurance and arthritis health promotion interventions.

He suggests using ergonomic interventions, or changing the workflow or duties to allow people to remain productive longer. For instance, a nurse or police officer could be reassigned from patient handling or street patrol to perform administrative duties. “Wal-Mart might have an elderly greeter at the door instead of at a labor-intensive job so it is not so burdensome on the joints and body,” he says.

Source: Arthritis Today"Arthritis Hits Blue-collar Workers Harder" (August 12, 2011)

United Kingdom: Fifty Plus Unemployed Face Challenges in Labor Market

Research conducted by the Department for Work and Pensions shows that unemployed workers aged 50 and older take longer to get back to work and are at greater risk of drifting into long-term unemployment or prolonged economic inactivity. The study--"Qualitative Research into Enhanced Jobseeker’s Allowance Provision for the 50+"-- suggests that older newly redundant claimants have a number of key barriers to work that stem from having long work histories e.g. the lack of a CV, lack of job application experience and lack of familiarity with the modern labour market and with online job application procedures.

The report looks at the effects of measures introduced in April 2010 to help Jobcentre Plus advisers deliver an enhanced service to those aged over 50 and claiming Jobseeker’s Allowance (JSA). The additional support introduced for the 50+ took the form of three voluntary measures: access to work trials from day one; entitlement to an extra 30 minutes of adviser time; and eligibility to be fast tracked to Stage 3 of JRFND. Enhanced adviser training was introduced at the same time to support the changes.

Source: Department for Work and Pensions Press Release (August 11, 2011)

Australia: Government Appoints First Age Discrimination Commissioner

The Australian government has announced the appointment of Susan Ryan as Australia’s first full-time Age Discrimination Commissioner. According to Attorney-General Robert McClelland, "[i]n her new position of Age Discrimination Commissioner, Ms Ryan will be a dedicated advocate not only older Australians, but also young people who might be affected by age discrimination." Among other things, her job will be to operate as part of the Age Discrimination Act to tackle age discrimination in workplaces and in the wider community.

Minister for Mental Health and Ageing Mark Butler said that "Australians have the fifth longest life expectancy in the world, and we all want a future where we are treated fairly and valued for our contributions." In addition, he noted that Australia needs more employers and the broader community to appreciate the important qualities and skills older Australians bring to the workplace and public life, something the Commissioner can help bring about.

Sources: Australian Human Rights Commission News Release August 1, 2011; Office of Attorney General News Release (July 30, 2011)

Denmark: Tax Board Rules That Employer Health Check for Seniors Is Taxable Benefit

SKAT, the Danish tax authority, has ruled that an employer's provision of a health check for employees 55 and over designed to help encourage employees to continue working instead of retiring and accepting a pension cannot be provided tax free. According to SKAT, tax free provision of benefits is only allowed only when it is part of an employer's general personnel policy for all company employees, and not when offered only to some employees.

Sources: SKAT Tax Board File No. 10-203449 (June 21, 2011); BDO Chartered Account Co. Newsletter (July 5, 2011)

Canada Gets High Marks for Responding to Aging Workforce

According to a new research report by Schroders, Canada has been facing up to the economic challenges of an aging population, but will still need to do more. The authors--Virginie Maisonneuve, Head of Global Equities at Schroders, and Katherine Davidson--conclude that Canada has been quick to recognize its impending demographic transition and adjust its institutions accordingly. The only ways to break the relationship between reduced labor supply as baby boomers retire and lower GDP growth is "to increase immigration or raise participation rates, especially of older workers" and Canada is doing just that.

The report says, however, that future growth will have to be driven by improvements in labor productivity and Canada is expected to face the highest age-related spending of any OECD member state. Here, too, Canada looks to be in good shape, with a strong record in controlling costs. For example, it spends 10% of GDP on health care versus the US at 16%, and it relies less on the state for pension provision with private pensions and other investments providing over 40% of retirement income, compared to the OECD average of 20%.

Source: PR Newswire News Release (July 21, 2011)

Massachusetts: Two Reports Focus on Rise in Older Worker Population and on Retaining Older Workers

Commonwealth Corporation released two new reports focusing on the aging population in Massachusetts, its effect on the labor supply, and strategies for retaining older workers. Among other things, according to the reports, by 2020, almost 27% of Massachusetts workers will be age 55 or older, Already some industries have a high percentage of older workers--in education and health services, almost a quarter of employees are 55 or older, and in repair, maintenance and personal services, the number is 28.2%.

One report--“The Increased Presence of Older Workers in the Massachusetts Labor Market”--provides an overview of trends in the labor force among the nation's older population and presents more recent labor market outcomes of older workers in the nation and in Massachusetts. This report also examines the industries and occupations in which older workers in Massachusetts are employed and the change across the different industries/occupations.

The other report--“Retaining Older Workers”--summarizes the projects that participated in Commonwealth Corporation's Older Worker Retention Strategies Grants funded by the Workforce Competitiveness Trust Fund and presents findings and lessons learned from the pilot projects.

The reports are joint projects of Commonwealth Corporation and the Center for Labor Markets and Policy at Drexel University and Community Matters, respectively.

Sources: Commonwealth Corporation News Release (July 20, 2011); Boston Globe "A jobs pinch for the ages" (July 21, 2011)

United Kingdom: TUC Report Finds Improved Job Market for Older Workers and Retirees Since 1992

A report issued by the UK Trades Union Congress (TCU) finds that the years since 1992 have seen a significant increase in the proportion of over-50s and people over retirement age in employment. According to "Age and Gender: What has changed in the labour market in recent years," among other things, the percentage of people aged between 50 and 64 in work has risen from 56.5% in April 1992 to 64.9% in December 2010, and, over the same period, the proportion of those aged over 64 in work rose from 5.5% to 9%.

While the report also reveals that young people have become less likely to be in employment over the same period, TUC General Secretary Brendan Barber said that "It is a mistake to blame older workers for youth unemployment--they tend not to be doing the jobs young unemployed people might expect to get." Barber also said:

'Older people bring a wealth of skills and experience to the workplace. The increasing number of over 65s in work shows that older workers are highly valued and that the government is absolutely right to scrap the default retirement age.

'But there is a darker side to people to working beyond their retirement. Low wages and poor pension provision, particularly in the private sector, mean that many people simply cannot afford to retire at 65. The failure of far too many employers to help staff save for their retirement is forcing these people into pensioner poverty and placing a huge cost burden on the state.

Source: Trades Union Congress Press Release (July 13, 2011);

Survey Finds Boomers Preparing To Work in Retirement

A survey conducted by SunAmerica Financial Group in collaboration with Age Wave reports that more Americans are expecting to retire later and work throughout it. The "SunAmerica Retirement Re-Set Study" found a significant shift in attitudes and actions since 2001, when SunAmerica conducted its initial landmark retirement study with Age Wave. In particular, it reports that:

• 54% of people 55 and older view retirement as a new chapter in life, rather than a winding down—-up from the 38% that held a similar in 2001
• pre-retirees say they now intend to delay retirement by five years—-from 64 to 69
• almost two-thirds of those surveyed say they would ideally like to remain productive and include some work in retirement to stay active and involved

Source: SunAmerica Financial Group Press Release (July 12, 2011)

Europe: Aging Population Requires Making Full Use of Available Employment Potential

Speaking at an informal meeting of the ministers for labor and social affairs, Leila Kurki, president of the Section for Employment, Social Affairs and Citizenship of the European Economic and Social Committee, said that "future pension funding needs will not be determined by the demographic ratio (ratio of older people to people of working age)" but that "the decisive factor is rather trends in the economic dependency ratio, or in the ratio of people receiving benefits to people in employment.” Thus, governments should focus on effectively increasing labor market participation rate of people of working age rather than focusing on making changes to pension systems, tightening pension conditions, weakening pension rights or raising the statutory retirement age.

“Jobs must be designed so that people are able to work at least up to the statutory retirement age.” Kurki pointed out that this would entail radical changes in working life.

Work and management would have to be organised in a way that accommodated ageing at every stage of a person’s career. Working conditions and the working environment must be adapted to suit workers of different ages. Discrimination and negative value judgments against older workers must be combated.

Updating of professional skills and preventive healthcare were of key importance.

Source: European Economic and Social Committee Press Release (July 7, 2011)

Israel Debates Raising Retirement Age for Women

Although not yet officially released, Israel's Finance Ministry Committee on Female Retirement Age is expected to recommend raising the retirement age for women from 62 to 67, and not to 64, to the same as men, and opposition is coming from many quarters. According to an article in Haaretz, there is widespread opposition in the Knesset, which must approve any changes. In addition, both Talia Livni, president of the Na'amat women's organization, and a representative of the Histadrut labor federation, quit the public committee after the issue turned to raising the age to 67 instead of the original 64 when the the committee was appointed.

An editorial in the Jerusalem Post acknowledges that, since improved medicine and higher living standards are leading to rising life expectancies and an increasingly older population, the recommendation sounds reasonable enough. However, it stated that before the retirement age is raised for women, steps should be taken to ensure more women enter the work force and stay employed longer. Among other things, the Post noted that just 62.2% of women aged 55 to 59, and 6.5% of women aged 65 or older, participated in the job market in 2009, compared to 76.7% and 17.8%, respectively, of men.

Unlike in Europe, where dwindling birth rates, combined with higher life expectancy, has resulted in an increasingly older population, Israel’s balance between young and old is even. Israelis over the age of 65 make up just 9.8% of the population, compared to an OECD average of 14.6%. As a result, the need to raise the retirement age is less pressing here.

We are, nevertheless, outpacing the OECD in the speed at which we are raising the retirement age for women. The average retirement age for women in OECD countries will reach 64 after 2030. If the Treasury has its way, this will happen here in 2017.

Sources: Haaretz (July 1, 2011); Jerusalem Post "A fairer retirement for the fairer sex" (July 5, 2011)

Multi-generational Workplace: Managing the Technology Gap

CIO Inisght has published a series of articles showing employers how, through a combination of policies, programs and tools, it’s possible to bridge the technology generation gap and engage all employees and build a robust and motivated workforce. In them, Samuel Greengard notes that attitudes across generations differ greatly, and cites an Accenture technology strategist saying younger workers are thumbing their noses at IT policies, using nonstandard applications and "improving" things whenever and wherever they deem it necessary.

Greengard's recommendations for organizations to address multi-generational challenges are:

1. Develop a well-reasoned and balanced technology policy and ensure that employees read and understand it.
2. Provide training to workers--particularly older employees who may be well-versed in using email and Web tools, but are lagging in areas such as social media and crowdsourcing.
3. Rethink security and threat management. In this regard, forward looking organizations focus heavily on endpoint security and a more holistic protection model.

In addition, separate articles present:

• a list of five ways to narrow the age gap;
• a case study at UNISYS about bringing one's own device, and
• connecting a multi-generation workforce at a Canadian construction company.

Source: CIO Insight "Managing a Multigenerational Workforce" (June 30, 2011)

United Kingdom: Survey Shows Unemployment, Hiring Issues for Workers 55 Plus

A survey released by Aviva shows that 39% of over-55s have experienced redundancy, enforced early retirement or stopped work due to illness in the run up to retirement, and that 74% say it is harder to find work after their 55th birthday. Breaking down the numbers, "The Aviva Real Retirement Report: Issue Six" reports that Indeed, 15% report being made redundant, 11% were forced to stop work due to illness, and 11% were forced into early retirement.

In reaction to their financial difficulties, 68% of the over-55s said it has had a detrimental effect on their retirement finances, with 34% having to cut back on their lifestyle, 7% worrying about how to pay an outstanding mortgage and 11% considering using assets such as their house to pay for retirement. Nevertheless, the report says that 5% of over-55s saw the "count-down" to retirement as the opportunity to choose to move to "part-tirement" and 3% to start their own business.

In a story following up on the Aviva report, Jo Thornhill writes in This is Money that "The pensions crisis means over-55s will need a 'patchwork' of roles to boost retirement income". This would be a patchwork of part-time work, consultancy, self-employment and leisure time.

Source: Aviva News Release (June 29, 2011)

GAO Issues Report on How To Ensure Income Throughout Retirement

The U.S. Government Accountability Office (GAO), at the request of Sen. Herb Kohl, the chairman of the Special Senate Committee on Aging, has studied and released a report on how best to ensure income throughout retirement, finding that found that while most retirees rely primarily on Social Security, most Americans fail to maximize their benefits.

The report--"Retirement Income: Ensuring Income throughout Retirement Requires Difficult Choices"--finds, among other things, that around 72.8% took benefits before age 65, and only 14.1% took benefits the month they reached full retirement age, noting that, by taking the benefits on or before their 63rd birthday, 49.5% passed up at least 25% to 335 in additional monthly inflation-adjusted benefits that would have been available had they waited until full retirement age.

“As workers near retirement they not only have to focus on saving money but on closely managing their investment throughout their retirement years,” Kohl said. “This report shows that many Americans will need to save much more or work longer in order to avoid the very real risk of outliving their savings.”

Among the report's recommendations:

• Many retirees should delay taking Social Security to increase payments for life.
• Depending on net worth, households also should consider buying a life annuity, particularly if they don't have a traditional pension that guarantees sufficient income.
• Retirees should make withdrawals from their investment portfolio at a rate of no more than 3% to 6% annually at retirement, with adjustments for inflation, to help ensure they won't run out of money.

Source: U.S. Senate Special Committee on Aging News Release (July 1, 2011)

China: Workforce Potential To Decline Due to Aging Population

China's workforce population is at a turning point because of an aging population, according to an Allianz Group. Drawing on latest census, it says that China has a population of around 1.34 billion people, though population growth has nearly halved in the past decade compared to the decade before, and that population aging increased further not least due to the fact that according to estimates some 400 million fewer children were born as a result of the one-child policy introduced in 1978.

"Even if the one-child policy were relaxed or lifted, the decline in the workforce potential could be alleviated but no longer prevented," says Professor Michael Heise, Chief Economist and Head of Corporate Development at Allianz. The turning point for China's labor market will be reached in 2013, according to findings from the recent Allianz Demographic Pulse.

According to Allianz, it is important for China to establish a demographically sustainable social system as a matter of urgency in which capital-funded private provisions play a key role. Among other things, this could include increasing the retirement age to 65 years, thus delaying the demographic turning point by another three years and significantly lowering the age ratio in the long term.

Source: Allianz Group Allianz Demographic Pulse (July 1, 2011)

EBRI: Delayed Retirement May Not Be Enough To Cover Basic Expenses and Health Care

According to an EBRI Issue Brief, many Baby Boomers and Gen Xers would not have adequate income to cover their basic retirement expenses and uninsured health care costs even if they delayed their retirement past the age of 65. A major factor that does make a difference in a person’s ability to meet their basic expenses and uninsured health care costs in retirement, is the whether they are still participating in a defined-contribution retirement plan (such as a 401(k)) after the age of 65.

In "The Impact of Deferring Retirement Age on Retirement Income Adequacy," published as EBRI Issue Brief No. 358, EBRI reports that the lowest preretirement income quartile would need to defer retirement age to 84 before 90% of the households would have a 50% probability of success. "Although a significant portion of the improvement takes place in the first four years after age 65, the improvement tends to level off in the early 70s before picking up in the late 70s and early 80s." At the other end of the spectrum, 75.9% of households in the highest preretirement income quartile are likely to have adequate income for retirement if they retired at age 65. This increases to 81.1% if they keep working to age 69.

In addition, the study noted another major factor in ensuring adequacy: whether stochastic post-retirement health care costs are excluded (or the stochastic nature is ignored).

For the lowest preretirement income quartile, the value of deferral (in terms of percentage of additional households that will meet the threshold by deferring retirement age from 65 to 84) decreases from 16.0 percent to 3.8 percent by excluding these costs. The highest preretirement income quartile experiences a similar decrease, from 12.8 percent to 2.6 percent.

Source: Employee Benefit Research Institute Press Release (June 7, 2011)

United Kingdom: Researcher Argues for Scrapping Pension Retirement Age for Years of Service

As the United Kingdom debates a bill that would equalize a women's pension age with men's at 65 by 2018 then start to rise to 66 along with men's in 2018, one academic is pushing the argument that the government scrap the pension age altogether and instead base entitlement on the number of years someone has worked.

Sarah Harper, Professor of Gerontology at Oxford University and Director of the Oxford Institute of Ageing, and one of the authors of "Living Long and Prospering?" told a BBC interviewer that the pension age would not reflect the discrepancies in individuals' life expectancy, and it would be fairer to move the pensions system away from age and instead relate it to the number of years worked.

As an example, she compared a low-income male, with an unhealthy lifestyle who retired at 65 in ill health, who could expect to live another 12 years, with a high income male, who was a manager and professional who could easily reach his late 80s--an 11-year difference. If there were a 45-year work requirement, their years of collecting a state pension might be very similar.

Harper did note, however, that even under her proposal, provision would have to be made for some groups of people who had been outside the workforce.

Source: BBC "Scrap pension age, academic says" (June 20, 2011)

United Kingdom: Survey Compares Older and Younger Workers on Training Opportunities, Performance Reviews, and Health

The Chartered Institute of Personnel and Development (CIPD) says that a survey found that older workers are often neglected when it comes to training and performance management and cautions United Kingdom employers about the need to ensure they are managing the performance of all employees effectively, particularly before the final phase out of the default retirement age. In addition, the survey "shoots down the myth" that workers’ ability to do their job suddenly declines after they hit 65.

According to CIPD's "Employee Outlook: Focus on an Ageing Workforce," 46% of workers aged 65 and above report they have had a formal performance appraisal either once a year or more frequently, compared to 65% of all employees. In addition, 44% of employees aged 65 and above have not had a formal performance appraisal in the last two years or never, compared to an average of 27%. With respect to training opportunities, the survey found that 51% of those aged over 65 said they had received no training in the last three years or never, compared to 32% across all age groups.

On health issues, the 28% of older workers said their physical ability has declined a lot and 51% saying their physical ability has declined a little. However, while workers aged up to 34 are significantly less likely to report a decline in their physical ability to do their job, thereafter there is little difference between the youngest and the oldest workers, with 17% of 34–45-year-olds saying their physical ability has declined a lot and 51% a little. In addition, 91% of workers aged 65 and above say their mental health is good or very good, compared to a survey average of 74%; 69% of older workers report their physical health is good or very good compared to 64% for workers across all age groups.

Source: Chartered Institute of Personnel and Development Press Release (June 20, 2011)

Research: Costs of Illness and Early Retirement of Older Workers in Australia

Australian researchers have published results showing that illness-related early retirement has significant economic impacts on both the individual and on governments as a result of lost income, lost taxation revenue and increased government support payments, and quantifying the extent of these impacts for Australia. According to "Economic impacts of illness in older workers: quantifying the impact of illness on income, tax revenue and government spending"

[P]ersons out of the labour force due to illness had significantly lower incomes ($218 per week as opposed to $1,167 per week for those employed full-time), received significantly higher transfer payments, and paid significantly less tax than those employed full-time or part-time. This results in an annual national loss of income of over $17 billion, an annual national increase of $1.5 billion in spending on government support payments, and an annual loss of $2.1 billion in taxation revenue.

The authors--Deborah J Schofield, Rupendra N Shrestha, Richard Percival, Megan E Passey, Simon J Kelly, and Emily J Callander--conclude that "In the past, policy has focused upon economic incentives to defer retirement. However, as ill health is a primary barrier to workforce participation in older Australians, economic incentives alone may not be able to increase participation if the underlying health conditions are not addressed. Investment in improvements in health is potentially an important way of improving national living standards."

Source: BioMed Central Public Health Volume 11 Abstract (June 1, 2011)