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Finance & Business

Pensions & Insurance

Longer life may mean later retirement

Pensions & Insurance

04/03/2008Longer life may mean later retirement

State retirement ages worldwide look set to increase, spurred on by the twin pressures of increasing social security costs and lower mortality rates.

Ah, the fountain of youth. We live in a world obsessed with staying younger and living longer. Look through any newspaper or magazine or flip through the television channels and you will be sure to find something that relates to the topic of increasing one's longevity. But while we are busy romanticising the ideal of a longer life, have we stopped to consider any of the potential drawbacks?

One drawback may be “an increase in state retirement ages,” says Giles Archibald, Mercer’s global head of international retirement services. Archibald suggests, “The twin pressures of increasing social security costs and lower mortality rates are driving changes in retirement provisions.”

At present Norway and the U.S. (for those born after 1960 in U.S.) already have a retirement age over 65, while some countries still have a national retirement age (NRA) under the age of 60, such as, China, Russia, Vietnam and Venezuela just to name a few.

Drawbacks of a later NRA
What are some of the further potential drawbacks of a later NRA, beside the obvious point of having to work further into our lives? According to Yvonne Sonsino, head of Mercer’s international retirement business in the UK, “Western Europe is in a particularly difficult position with an aging workforce and a history of generous social security provision.” She explains that passing legislation on these issues will be an enormous challenge for politicians who will risk losing the support of their voters. She goes on to cite the recent strikes and disturbances in France as an example of the potential problems ahead.

Silver lining
So, is there a silver lining anywhere on this seemingly grey cloud? Well, according to Archibald the governments are, “increasingly looking to the private sector to supplement social security, placing more pressure on employers resources...as social security is eroded, innovative company sponsored retirement plans are becoming more attractive tools for companies to recruit talent and remain competitive.”

With employers having to step up their retirement packages, perhaps those extra couple of years added to our work life will be worth the money.

4 March 2008

[Mariah McKenna]

[Copyright Expatica 2008]