Retirement concerns

We have just been informed that the Treasury is mulling yet another money-saving stratagem – raising the retirement age. To be fair, this ploy is a runaway favorite in most OECD economies (with France constituting the conspicuous exception).

This would mean that no man could begin drawing a pension before reaching age 70 (versus the current 67) and no woman would before she’s 64 (as against 62 now). In reality, full National Insurance Institute oldage pensions aren’t available till age 67 for both genders.

On paper, Finance Minister Yuval Steinitz’s position sounds entirely plausible. With the huge Baby Boomer generation reaching old age, it’d be harder and harder for their offspring to fill pension coffers. The burden, we’re repeatedly told, is too heavy to bear (never mind that the older generation had contributed to pension funds for decades and that it earned its pension benefits).

Hence the facile solution both here and abroad is to keep the oldsters from retiring. That translates to paying out less while the economy keeps profiting from their labor and their prodigious experience.

The danger, though, is that instead of enjoying the best of all worlds we’d impose a worst-case scenario on all of society’s components. If older citizens are required to work for more years, they’ll per force deny younger applicants jobs. More likely, though, is that as employees age, they’ll be sacked because long tenure inevitably makes them expensive to their employers.

Age-discrimination is rampant, often well-disguised and denied, with Israeli courts offering no succor. This is true even before retirement age. Often employees, including qualified professionals, begin to become highly vulnerable above age 50. They’re then more likely to be fired and less likely to be hired.

The probable upshot is a situation in which older members of the work force cannot find employment, while being denied pensions. That may be fine as far as the Treasury’s short-term bookkeeping is concerned but exceedingly devastating to a growing sector of society.

Additionally, older categories of jobless individuals are less likely to qualify for various assistance programs to tide them over, because they had amassed assets during decades of gainful employment and are therefore formally too well-off to fit official definitions of privation.

Comparisons to the situation overseas aren’t entirely valid. Israeli society is appreciably younger than its counterparts in Western Europe. Consequently our problem should not be quite as acute as in those countries where sharply shrinking birthrates mean that fewer and fewer young workers must support more and more aging retirees. In our circumstances the harping on retirement age appears increasingly like a cop-out.

It needs to be recalled that retirement age here was already raised in 2004 by two years for both men and women and that last December the Knesset overwhelmingly voted down a proposal to push it off for women by a further two years. The Knesset opted to put this option on the shelf for the next five years – until 2017 – pro forma to allow the government time to hatch up programs that would assure women employment opportunities between ages 62 and 64.

In the meantime, many older professionals are being pushed out by employers who have made retirement mandatory, even if these professionals – often in prestigious positions – prefer to keep working. Such absurdity, for instance, had made necessary a Knesset bill allowing physicians in public hospitals to stay employed until age 70 (both genders), due to the severe shortage of doctors.

This isn’t to say that at some point there will be no choice but to tinker with retirement age, if for nothing else due to increasing life expectancy. But as long as our proportion of young to old isn’t as dire as in Europe, we need to use the time to safeguard older employees from discrimination and to remove rigid strictures that would leave open the option of continuing to work into ripe old age without being coerced to do so.

This is trickier than meets the eye and calls for doing away with ingrained prejudice regarding both compulsory retirement and compulsory continued toil.