Tuesday, June 16, 2009

My Response to The Economist's Online Debate

"This house believes that retirement in its current form should be abolished."

Dear Madam,

The current pension system is in shambles. Developed nations around the world are slowly going bankrupt trying to cope with more people exiting the workforce through retirement than entering it; less workers caring for more retirees. This is worsened by the fact that life expectancy is rising which means that they are collecting their pensions far longer than before. One option is to abolish the legal maximum age of employment. This would allow people to continue working thereby adding more to government pension plans and withdrawing less. This looks great on paper.
However if we chose to abolition maximum retirement ages there are some caveats to consider. Those who will be least willing to retire are high ranking executives, essentially closing off the best jobs to the more efficient youth. Especially in the world now, everyone needs to be aware that anybody born a few years after them will be more integrated in the global digital system than his or her elder. I am sure everybody under 30 has experienced their boss spending hours explaining how to do some 'new' technique in Excel just to think about how you figured that out yourself in high school or university. Perhaps in the past it was necessary to keep the older people on hand as long as possible because of the nature of education through apprenticeship. Not to mention until about 1800 technology did not change nearly as quickly so the longer a person practiced his or her trade the better they would be at it; they didn't have the concern that at some point down the line everything will be different and they will have to learn the whole system again.
This could also lead to a greater concentration of wealth. If a parent can stay active in a company as a senior executive long enough, it makes it much easier to pass on the position by nepotism to their child; despite a 20 or 30 year age difference. Especially when you add to the fact that salaries and bonuses are quickly rising in their share of the remunerations the wealthy receive. If people were able to collect these funds for an extra 10 - 15 years think about how many more legacies there would be.
Anybody who has given up on his delusions of grandeur but has enough savings to afford him or herself a reasonable retirement will opt to do so instead of working a menial, dead-end job with little chance of further promotion. Add to this list people who work physical labour, or are in decent unions, and have the option to retire early for a percentage of their full pension. Add the people who barely make their respective national governments stipend.
When considering such a radical change one must consider who it will benefit. Simply allowing people the chance to work longer will not necessarily lead to them doing so. Since anybody can chose to retire at any age up to the limit already, perhaps they will still do so. Those who do keep working may not necessarily be the people we had hoped would continue.
Will this measure be fair and proportional? It doesn't appear so. In fact it is likely that this would be the first step in destroying a pension system that millions of people rely on. If the maximum retirement age is raised, will the minimum age to receive a pension decrease? Do we chose to coax people back into working with some tax benefit?

View the whole Debate here.

3 comments:

regroce said...

As the retirement age keeps extending (in the US, it's continued extension of age before one can collect Social Security), the younger are the folks who are getting laid off from their jobs to be replaced with even younger folks. For example, we keep hearing news of nurse shortages. In truth, nurses aged 50+ are getting laid off, and because the field doesn't want to pay them. As a result, we have younger, not fully educated and inexperienced folks in the professional fields (who don't make as much money as their jobs should pay), and older, over-experienced, over-educated folks in menial jobs (who don't make as much money as they used to). Meanwhile, the corporations continue to clean up the cash.

Bill said...

As a state worker, I can see the meaninless future behind my retirement. Based on what I have seen, I have to work till I'm basiclly in the hospatal or nursing home. Our system has no value other then for the ones that created it. We can no longer enjoy going to work and look forward to future because we have to continue working just to get by in this world. I think the gov't should stay out of our retirement and banks should too. Hold our money. Don't tax it. Don't asses it with fees. Leave it alone.

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