Falling birth rates and rapidly aging populations in well-developed nations around the world is creating what has been described as a "demographic tsunami" that threatens to capsize government budgets and wreak widespread economic havoc.
Based on a sampling of recent reports, it appears that one particular "solution" is attracting growing interest from policymakers: raising the retirement age.
Germany: "Retirement Age About to Rise" (via FT.com)
Germany's lower house of parliament raised the retirement age from 65 to 67, in a move to tackle the country's ageing population and spiralling pension costs. The upper house is expected to endorse the law later this month.
United Kingdom: "Growing Old Gracefully" (via The Guardian)
The pensions bill is currently going through the UK parliament. Its main features are to restore the link between earnings and the state pension, subject to affordability. It reduces the qualifying payments of the national insurance contributions to enable people to draw the full state pension. In addition, subject to an opt-out, it urges employees not already in an occupational scheme to put 4% of their salary in "personal accounts", with employers providing 3% and the Treasury adding another 1%. In stages it will also raise the retirement age to 68. So by 2050, the basic state pension for a single person could be £135 a week, adding up to 6.7% of the UK GDP
Italy: "Italy Trade Union Leader Says Govt Must Change Policy on Pension Reform" (via AFX)
Italian trade union CGIL said there is no room for negotiations with the government on pension reform unless it changes its policy, CGIL secretary general Guglieglmo Epifani said in an interview in the daily La Repubblica.
Epifani said Italy's Economy Minister Tomaso Padoa-Schioppa has told Brussels the government is ready to raise the retirement age and change the mechanism by which pensions are calculated.
'If this line is maintained there is no room for negotiations with us,' Epifani said.
He said the government has to change its policy and engage in meaningful talks with the unions. Otherwise an agreement would be difficult.
La Repubblica said Epifani's words come just days before the start of talks between the government and the unions over pension reform.
Recent reports said the government will propose to increase the retirement age to 58 from 57 with effect from Jan 1, 2008, after 35 years of pension contributions. The retirement age would then gradually be increased.
Canada: "Let Workers Stay on the Job Past Age 65, Bank of Canada Governor Says" (via Canadian Press)
People should be able to stay on the job past the standard retirement age of 65, the governor of the Bank of Canada said Thursday.
David Dodge told the Calgary Chamber of Commerce that the greying of the labour pool means fewer and fewer young workers will be available. "Many individuals may wish to remain active in the labour force well past the conventional retirement age," said Dodge, 63.
"To increase our flexibility, it's important that we remove any barriers to their continued participation."
Employers need to be more open to older workers and more flexible in setting work schedules.
As well, Dodge said, conventional pension schemes should be redesigned to meet the needs of those who stay on past 65.
Ireland: "Mandatory Retirement As 'Ageist' - McGuinness" (via Kilkenny Advertiser)
Mandatory retirement is 'ageist' and should be abolished to make the most of our older generation, according to Fianna Fáil deputy, John McGuinness.
Deputy McGuinness says that there is no greater symbol of ageism in action than forced retirement and he believes that this type of ageism needs to be tackled. He has also raised the issue with the Minister for Enterprise, Trade and Employment, Micheál Martin.
"The suggestion that as soon as you reach a certain age, you have to leave the workforce is ridiculous. We need to be flexible on this. Age is just a number, not a cut-off point. It cannot be a demarcation point at which we decide whether or not a person can make a worthwhile contribution â irrespective of ability, experience and knowledge, " he said.
Given that the U.S. faces similar demographic pressures and is burdened with a social safety net veering towards eventual collapse, it won't be long before the idea of raising the retirement age, despite protests from organized labor and other groups, is firmly on the American political agenda.
I have run the numbers. I can retire when I am 147.
We are all going to die at our desks.
Posted by: Edward Charles Ponzi Jr | March 12, 2007 at 10:08 PM