Retirement Reform?

It was interesting to attend the Institute of Directors’ Roadmap for Retirement Reform presentation last Monday (October 19th) which they used to announce the launch of their new Centre for Retirement Reform.  On the face of it the presentation looked as if it would be largely about pensions but fortunately – and refreshingly – all the speakers seemed to recognise that pensions reform per se is not going to be enough.  Of course it was useful to be reminded yet again that our current pensions system was introduced when the average male life expectancy was 63 – what clearer evidence is needed of why it is no longer fit for purpose? But beyond this, the clear message from all seemed to be that meaningful impact in terms of reforming “retirement” will only come when employers create the culture, opportunities and support to help those people who want to, or need to, stay in work for longer. 

We look forward to finding out more about the work of the Centre as it develops. At this stage, perhaps we have two caveats.  Apparently one of the Centre’s first areas of interest is to be what are commonly labelled “olderpreneurs” – older individuals who start their own businesses. In respect of this we take the view that the focus needs to shift from helping older people to start a business (generally comparatively easy) to helping them build and sustain their business (difficult). Otherwise all that is happening is encouraging a new generation of business lemmings, racing towards a cliff-edge of failure and disappointment.  Additionally, and on a different note, we yet again call for the development of a new terminology. “Retirement” will only truly be reformed when we have an adequate vocabulary to describe all the various states (non-working, part-time working, portfolio working, self-employment, volunteering, etc) that are currently covered by this outmoded term.

 

 

“Building a society for all ages”

The deadline has now passed, at least for the moment, to make your voice heard to the government over their proposals outlined in “Building a society for all ages” a document which focuses predominantly on the issues surrounding our ageing population. The issues are very wide-ranging and extremely important.

We here, at in my prime, made our own representations in the fields in which we operate and if you are interested in seeing what we had to say please click here 

To read the original government document click here

Increasing State Pension Age: black and white…..or grey…?

Conservatives’ plans to raise the state pension age to 66 will make youth unemployment worse leading to a 200,000 rise in unemployment in the first year – many of whom could be young jobseekers. This is the view of Ray Barrell, Director of Macroeconomic Research at the National Institute of Economic and Social Research who made his prediction at this week’s Just Ageing Seminar, hosted by the Equality and Human Rights Commission (EHRC). He supported his case by commenting, “If we extend working lives effectively the people we will have to help in the labour market are not those who are in a job and can stay in it for another year, but those at the other end of the labour market who are looking for a job, and the job that would have come up for them is no longer available.”

Stirring stuff when accompanied by alarmist headlines such as Tory plan to raise pension age will add to youth unemployment (Personnel Today)

But surely it’s not that simple. Not only do young, incoming job seekers not automatically replace outgoing retirees due to lack of similar skills and experience, but not all older workers are going to want to keep working or, if they do, to keep working in the same job. Research has shown that later life career changes are becoming more desirable for older individuals with those who want to work increasingly seeking to do so under their own terms. And for many those terms mean working less and working flexibly. The sooner employers start to address these issues, the sooner we should stop hearing these types of argument which effectively are comparing apples with pears – and ultimately just don’t add up.

Indeed, the Personnel Today article does not reflect a balanced view of proceedings at the Just Ageing Seminar. In particular, Sheila Wild, Head of Earnings and Age Inequalities at EHRC, arguing why the Default Retirement Age should be removed, said “ It is not a contest between older and younger workers, but about ensuring everyone who wants to work has the appropriate skills, whatever their age. The UK Commission for Employment and Skills has predicted 2 million new jobs between now and 2020 – and most of them will demand higher level skills. In securing jobs coming out of recession, skills levels are likely to be the key factor, not age”.

A grey day for Heyday? Not in the longer term.

And so the “Heyday” case has finally drawn to a conclusion with seemingly disappointing results. Even in its final battle Heyday was destined to be a loser and its (poorly chosen) name will thankfully fade away into history. Let’s hope the new merged charity sticks to its knitting and does not make the same mistakes again. However, that is another story – for another day.

On the surface the outcome of the Heyday case is unhelpful, certainly to those who have had age discrimination cases pending. Much has already been written in the press about the case and we don’t wish to go over this ground again. The judge took a particular standpoint based largely on a historical perspective and this has let the government off the hook, at least in the short term. However, moving forward, it will clear the air and allow fresh and proper thinking instead of continued attempts to justify the previously taken, and very weak, position.

The demographics are moving one way only. The financial concerns of our older citizens and of government are moving one way only. And the skills needs of industry, business and employers at large are moving one way only. The debate can, therefore, move in one direction only. Nevertheless, it has to remain top of the agenda and we applaud all of those organisations which are fighting and lobbying to bring about the necessary changes, sooner rather than later.

We, at in my prime, have a slightly different perspective. We are more concerned with the next phase. How are employers going to manage their older workforces? How are individuals of any age going to plan for the rest of their lives, find the right balance between work and non-work, and determine the necessary stepping stones? And how are employers, employees and government going to work together to find solutions which are in the best interests of all concerned?

The Heyday judgement is just a temporary setback – but nothing in this life worth having comes easy.

Wise and foolish virgins

The gap between the “haves” and “have nots” in terms of pension provision is widening daily.

At one end of the scale those with fat, assured, protected pensions are sheltered from the economic woes of the majority of the ageing workforce. At the other end those with inadequate pensions face a future in which they will have to work for as long as possible before spending their remaining years in penury. Unfortunately this latter scenario is not necessarily a result of a lifetime of profligacy and reckless abandon; there are numerous reasons why those who have worked hard and done their best to save throughout their working lives still find themselves in a relatively pension-less situation.

Human nature being what it is one can see that this is going to cause problems. Working past normal retirement age may become a stigma – a sign to the rest of the world that the individual hasn’t managed their financial affairs properly and can’t afford to retire. The only antidote to this sorry state will be a change of attitude that sees later life working as desirable and aspirational – something to be valued and sought after even by those who don’t “need” the money. Many years ago there was a TV advertisement for a diet product which featured a (slim) woman saying “I eat xxx because I like to, not because I have to”. Something similar needs to be done, starting soon,  to improve the image of later life working.

Let them eat cake

I’ve had the privilege of previewing a new Institute of Directors publication, “Extending Working Lives” which is soon to be published. It is comprehensive, well-written, interesting – in fact an all-round good read. BUT… for its handy tips box on “10 ways to work after retirement”.  The first five of these are: Become a non-exec / Start your own business / Take up consultancy / Act as a mentor or coach / Offer training.  Of course! Piece of cake or what?

As the remaining five suggestions are all to do with volunteering, one can only assume that the title should probably have been “10 ways to work for free after retirement”.  The panacea of self-employment for older people is often dragged out as a solution for what to do about those pesky older workers, disregarding the fact that if making a realistic income from working for yourself was  that easy most people would have done it years ago. Those making such suggestions (and the IOD should know better) have only to look at the statistics for small business startup failure rates and the level of income generally achieved by those who do manage to keep going to know it’s only a realistic option for a minority.

Saving for retirement – the biscuit tin approach

Hardly a day goes by now without another piece of depressing information about the state of the nation’s pensions. In the last few days alone we have seen more defined benefit schemes closing, more reports on the lack of savings that individuals are making particularly during the recession, and soaring bankruptcy numbers among pensioners. One report, highlighting the fact that many are now unable to foresee when they might retire or how they might have adequate savings to live on, has  coined the term “baby gloomers”  to describe the plight that people feel they are in.

The advice that comes from the financial industry is plentiful but very self-serving: “save more for a pension”; “release some equity from your home”; “tuck your money away in an ISA”; “invest in buy-to let”; and more. The government believes that the answer lies in personal accounts which everyone will flock to in a few years’ time – we will see.

Many people, knowing their savings are insufficient but not by how much, would like to work longer, certainly past 65. Yet the government is still dragging its heels in a most extraordinary fashion. This is despite the fact that change is inevitable. The state pension age will be increasing to 68 in the coming years but the default retirement age is currently 65. What are people going to do –starve for three years? One glimmer of hope that the recession is providing is that firms are beginning to see the futility of redundancy as an answer to their problems and are looking at more innovative ways of managing the current problems with flexible arrangements, part-time working, sabbaticals etc. all now featuring. These are also ideal tools for dealing with an ageing workforce.

However, the first problem that must be addressed is one of awareness. There is, in the country as a whole, an order of magnitude lack of understanding among people of all ages as to exactly what it takes in financial terms to retire in some form of comfort. A fundamental and far reaching “reality check” is needed to reconcile the aspirational dream of an interesting, financially secure retirement with the ongoing provision that individuals are making through their working lives.

Retirement financial planning involves running up a store of wealth, retiring, and then running it down again over the course of the rest of our life – as simple as that. Building up a retirement pot is very much like tucking money away in a biscuit tin each week to save for Christmas – except Christmas may last twenty years or more.

For more see  Saving for retirement – the biscuit tin approach

Goodbye 9 to 5 – on TV

Following on from my previous blog, this week I tuned into a new TV programme “Goodbye 9 to 5” aimed at those over 55 who have retired or are about to retire.

It can be found on “Information TV” (Sky 166 or Freesat 402) and is put together by Chris Gosling who runs the firm Serious Leisure TV from East Anglia. The programmes are low budget but very interesting and professionally put together, and obviously now need all the visibility they can get as they roll out their schedule.

55 is an interesting age to choose but we can fully understand why. There will be those who have retired and will appreciate the leisure aspects and also the injustices that some in retirement will have to face but there are many for whom retirement is not yet an option and those people will be looking for content of a differing nature. Advance notice of issues to come show that Chris is well aware of this and we look forward to watching the content develop.

Furthermore, there is also a networking site to back it up which is actively seeking feedback and suggestions from people regarding the direction the programmes should take – and even, maybe, the possibility of contributing to the programmes at some future date. Check it out and sign up at http://goodbye925.ning.com/.

We wish this venture every success and look forward to seeing it progress.