It's right to get our wrinklies working

It's right to get our wrinklies working - here are three ways to keep them at it
Sunning themselves on a cruise as it sails through the Aegean; working on their golf swing down on the driving range; taking the grandkids on a daytrip while their over-stretched parents put in another long shift in the office – traditionally, those were the places you were most likely to find Britain's growing army of 70-somethings. But not any more. Increasingly, you are just as likely to find them sitting next to you on the commuter train, or jostling past you in the lunchtime queue at Pret.

The Department for Work and Pensions reported last week that a record number of 70- to 74-year-olds are now working. Across the country, 10% of that age group is in some form of employment, and the number is rising. Older workers are sticking with their careers in record numbers.

Plenty of people seem to think that is a problem – the GMB union blamed cutbacks in pension schemes and financial insecurity for the fact that older people were still slogging away in work when they should be taking the dog to the park and watching Countdown in the middle of the afternoon. But that's a big mistake. We should be celebrating the fact that people are working for longer, and figuring out ways to encourage their numbers to grow.

Life expectancy is rising all the time

Traditional retirement ages were designed for an age when people didn't make it much past 70, and were not in great shape once they did. But that has all changed. Life expectancy is rising all the time. It is now 81 in this country, up from just 70 in 1960. As healthcare improves, that is only going to keep on going up. It doesn't make much sense to retire at 65 when you are likely to live that long. After all, most work is white-collar these days.

It was hard to be a docker or factory worker in your 70s because your strength would have gone. It is perfectly possible to design loft extensions. There is even some interesting evidence that the over-70s are actually more productive at work than the 20-somethings. They have far better networks – it takes time to build up a lot of contacts – and they have better social skills, and those are the two qualities that employers most value these days.

Older workers will make a huge contribution to the economy

It is not often widely acknowledged, but one of the main drivers of post-war prosperity was not just technology and increased trade, but women joining the workforce in droves. Since GDP is simply output per worker multiplied by the number of workers, it shouldn't be hard to figure out that the more people work, the higher overall output will be.

If we could get that 10% figure for the over-70s working up to 30% it would give GDP a huge boost. It is hardly likely to be a coincidence that the richest part of the country – London and the southeast – also has the highest proportion of over-70s working, at slightly over 12%, compared with the rest of the country.

How to get more old people working

1. Be flexible

Encourage firms to be more flexible. One of the reasons it has become easier for women to work is because employers are more understanding when they need to rush home for the nativity play. That has probably not gone far enough yet, but a lot of progress has been made. The same kind of understanding needs to be extended to older workers. They are certainly going to need a bit more time off for routine medical treatments. They may also need flexibility to help out with grandkids. The more that is allowed, the easier it will be for them to stay in work for longer.

2. Give them a break

Encourage companies to offer sabbaticals. How about giving the over-70s the right to take a year off, much like maternity leave? A round-the-world cruise sounds like a lot of fun – but you don't want to keep taking those for the rest of your life. Companies should allow their older staff to take a gap year, then go back to the office when they feel refreshed and ready for some work again, and then let them do the same thing five years later. There is no need to make it compulsory – small companies may not be able to afford it. Just make it a target.

3. Offer incentives

nsure the tax and pensions system makes it rewarding to work well into your 70s. People are not going to work longer if it does not pay them, and the over-70s have usually built up enough capital to not to have to worry about day-to-day bills. Also, use the public sector to give a lead. If it sets an example on encouraging older workers, and stops offering early retirement to everyone, it will set an example for the rest of the economy.

It is worth making the effort. We discuss factors such as technology and monetary policy endlessly. But in fact the biggest single driver of economic growth is simply the percentage of people working. And the best way to increase that right now is to extend careers well into the eighth decade. It is already happening – but if we gave it some encouragement it would happen a lot faster.

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It's right to get our wrinklies working

Pension experts at Mercer have identified the countries with the best pension systems. At number 10 is Singapore.

The system is based on the Central Provident Fund, which covers everyone in a job. Some of the cash can be withdrawn during your working life, and a prescribed minimum drawn down at retirement as an income.

Overall, Singapore scored 65.9 out of 100. It fared well on sustainability measures, and integrity, but relatively low incomes in retirement dragged its combined score down.

The UK scored 67.6 out of 100. The system was ruled to have great integrity, and good incomes in retirement. The overall scores were also up from the year earlier, as auto-enrolment was rolled out further, bringing more people into workplace schemes.

The researchers, however, were worried about how sustainable the system would be in the future. They called for an increase in minimum pensions, and added that more people ought to be encouraged into workplace schemes and persuaded to contribute more to their pension. They also wanted to see more people saving privately for their pension, and working later in life.

In Chile the state offers means-tested assistance, a mandatory centralised pension for employees to contribute to, and there are voluntary employer schemes.

Chile score 68.2 out of 100. Its highest score was for integrity, with another good mark for sustainability. Relatively low incomes in retirement let it down, and the researchers said the biggest improvements would come from raising the contribution levels.

Canada has a universal flat-rate pension - with a means-tested supplement. There’s an earnings-related pension based on lifetime earnings, plus voluntary workplace and private schemes.

It scored 69.1 out of 100. Its best score was for incomes in retirement, while it also performed well for integrity. Its only relative weak point was how sustainable it might be for the future - particularly because older people don't tend to stay in work.

Sweden has an earnings-related system with notional accounts - although this system was introduced in 1999 so it’s still in transition from a pay-as-you go system to a funded one. There’s also a means-tested top up.

Sweden was given 73.4 out of 100. It scored excellently for integrity, and well for sustainability. The overall score was brought down by incomes in retirement, and the researchers called for more workplace and private pensions.

Switzerland has an earnings-related public pension, a mandatory occupational system and voluntary private pensions.

It scored 73.9 out of 100. It fared well for integrity and reasonably well for incomes in retirement. The researchers just questioned its sustainability.

Finland has a means-tested basic state pension and a range of statutory earnings-related schemes. It scored 74.3 out of 100.

It had high integrity scores, with a less positive result for incomes in retirement, and a surprisingly low score for sustainability. The researchers called for higher minimum pensions, higher mandatory contributions and encouraging people to work longer to improve sustainability.

The Netherlands has a flat-rate public pension and quasi-mandatory earnings-related occupational schemes - which are industry-wide defined benefit schemes based on lifetime average earnings.

The system scored 79.2 out of 100. All its scores were high - particularly for the integrity of the system.

The system in Australia consists of a government scheme, a mandatory employer contribution into a pension, and additional voluntary contributions from individuals.

It benefits from the fact that all workers have been automatically enrolled in their company pension schemes for some time, so participation rates are high. The minimum contributions have also been raised recently, which means workers are building reasonable retirement incomes. It had an overall score of 79.9 out of 100, with the only question mark being over sustainability.

Denmark’s system includes a basic state pension, means-tested state top-ups, a fully funded defined contribution scheme and mandatory occupational schemes.

The researchers said it was "A first class and robust retirement income system". It scored 82.4 out of 100, with high marks across the board.


Average Worldwide Life Expectancy 6 Years Longer Than in 1990
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