Society has been overrun by the reality of ageing. It must adopt a new approach to older workers, argues Harry Smorenberg.
The 'Work Ability Index' for many European countries is edging up to 75. This is not occurring in all sectors, I admit, but there are large groups of people who could easily carry on working until the age of 75. Life expectancy rates are continuing to rise rapidly, and by 2100, we'll certainly be closer to 100. Terminal forms of cancer will be chronic illnesses, while early detection and diagnosis mean we will be able to treat many conditions at an early stage.
And that makes finding an acceptable way to fund our 'wellbeing' crucial. Further healthcare rationalisation, alongside measures to promote healthy lifestyles and good risk prevention, will create a more efficient healthcare sector. And that's needed, as prevention, or treatment before conditions get out of hand, is always far cheaper than seeking a cure.
Our current pension systems date back to the previous century and are still based on pensions at 65 and a life expectancy of around 68. It is only logical, therefore, that we should now be seeking to re-establish equilibrium and adapt our working lives accordingly. Various countries are struggling to phase in retirement ages of 67 or 68, while really we should already be talking about increasing it to beyond 70. Trade unions go on about 'rights and promises' for older employees, while the focus of employers is specifically on the (higher) costs of these older employees.
Essentially, society has been overtaken by the facts, with all interested parties desperately clinging to rights established in the past. Working on beyond 65 is actually quite a challenge, certainly from a tax perspective. Indeed, many companies' HR policies contain no provision for this, with flexible working hours and workplace adaptations simply inconceivable. Salary structures are still very much based on careers rising to a peak and then coming to an abrupt end on retirement. Employees and employers are failing to anticipate the need to accommodate fluctuating career paths, to arrange refresher training or retrain staff for new jobs, and to cultivate the specific added value of and for older employees in the workplace.
We currently throw away huge amounts of capital and knowledge onto the scrapheap when people turn 65, while an ageing population makes it essential to maintain their productivity and knowledge, if only to ensure continuity. Our society, however, is focused on immediately discarding all that added value on retirement. Valuable staff are waved off with a bouquet of flowers and a carriage clock. They then set off in their camper vans on trips they could never previously have conceived of. Often they quite enjoy themselves for the first few years. And, to be fair, many people also stop working before 65 because they are made redundant or entitled to some form of bridging finance. Those people start getting bored even before they reach 65.
Many older people find voluntary work or a hobby to keep them busy. Others, however, start something new, find a part-time job or do a 'bit of this and that'. These days, there are some 20 years between retirement and the final curtain call, while pensions are proving to be of less value than we ever thought possible. In this way, we are creating a new group of relatively poor older people who are still perfectly capable of continuing to play an active and flexible role in society.
The word 'pension' ought really to be deleted from dictionaries. People need to learn to become the drivers of their personal financial continuity. That means learning how to budget and plan, and so to manage periods throughout their lives - including in their 'fourth age' - when they may be without work or income.
Governments and employers need to make specific and timely provision for flexible employment on an ongoing basis, including training and refresher courses for proper career development, as well as retraining older staff so they can be deployed appropriately and usefully in the workplace. Obviously, some form of exit system will still be needed, with structural help based on an element of solidarity. But we now need to adapt to living and working 'new-style'. It's time for the traditional parties to start thinking and acting 'out of the box' so we can all continue developing in a society able and willing to facilitate us to the maximum.
Harry Smorenberg is an independent strategist in the financial services industry and chairman of the WorldPensionSummit.