Retirement at 65: Who does the proposed change benefit?

Like most working people around the world, Trinidad and Tobago nationals look forward to retiring, when they can sit back and enjoy the fruits of decades of labour.

Retirement for many means they are now free – they can enjoy their golden years making up for lost time with family, friends and loved ones or seeking an adventure and exploring the world.

So it was no surprise that when Attorney General Reginald Armour announced that government is seeking to finalise legislation to increase the mandatory retirement age from 60 to 65, it would have ruffled some feathers.

The announcement, according to government officials, came after consultation with several unions and labour representatives.

Last Friday, Armour promised to bring a bill to amend the Senior Citizens Pension Act before the end of this year in order to give “our very knowledgeable and experienced senior citizens the opportunity to continue to contribute to our society.”

He said the amendments would modernise the pension scheme to complement the proposed increase in retirement age.

Many corporate and government bodies have lauded the move, highlighting the benefits of giving people purpose in a time where people are living longer, healthier lives and to maintain a shrinking labour pool. But at the ground level, working people don’t want to retire at 65; they prefer to retire earlier. at 60.

This now begs the question: does the decision to increase the age of retirement from 60 to 65 benefit the economy, or the people?

Business sector welcomes move

Economists and industry leaders have already shown their support. Speaking with Business Day, Paul Traboulay, board member of the Association of TT Insurance Companies (ATTIC) and Chief Risk Officer at Guardian Group, said the move would be beneficial one for the country, being one of the few which still has its mandatory retirement age set at 60. He said there were many factors that influence the increase in the retirement age.

One of those factors is the issue of longevity.

“The issue is that longevity is increasing. People are simply living longer,” he said.

“The issue is this – we look at longevity risk because it puts pressure on annuities and similarly any payments out of pensions and retirement benefits post the age of retirement means that the income would cease at a particular age and funding would have to continue. When you are running a social security or an individual kind of arrangement to support these people, it puts a strain, because the funding mechanism is really tied to the working age of the population.”

World Bank statistics show life expectancy in TT in 1980 was about 64. In 2020 it was 71. Macro Trends put TT’s life expectancy in 1980 as 66, and in 2020 it was 73.

In the private sector, some insurance companies’ retirement plans kick in at or after 60. Sagicor’s retirement plans kick in at the age of 65. Guardian Holdings goes up to 62, but provisions are made for an extension to give customers the ability to work by choice.

“For many of the companies that operate cross-Caribbean we have to be in compliance with the regulatory situation. The reality is you would find that companies would be at variants of 60, but the majority of private companies that are Trinidad-based are at 60.”

He added that a later retirement age could also be beneficial for citizens, particularly in the current volatile and uncertain climate.

“Any financial adviser in a first-world country would tell you that earlier retirement right now is a huge mistake, because of inflation and other issues. In fact, you are provided with a better cushion in a period that is highly uncertain to go to a longer retirement age than to retire earlier and then struggle to get work all over the place because you cannot make up the money at the end of the month,” he said.

He added that TT may be one of the few remaining countries in the English-speaking Caribbean that still has its retirement age set at 60. In the Dutch-speaking Caribbean, the retirement age moved from 65 to 70. In Barbados, it went up from 65 to 67 and a half.

He added that the national population has remained at the same level for quite some time but more significantly, the working population is shrinking at a rapid rate, according to actuary reports by the NIB. He said the public and private sectors would need to retain the experience and institutional capital that is held by the elders.

Police Service example

One example of this would be in the police service from 2010-2012, when then Commissioner of Police Dwayne Gibbs and deputy commissioner Jack Ewatski implemented the 21st-century policing module. Aside from several other measures to streamline the police service, the module used retired officers, who were brought back into the service on a contract basis.

“It probably accomplished two things,” Traboulay said “One, it accomplished the wider goal of getting your best talent optimally engaged, and the lesser issue was that there was an institutional and experience capital that these people have that would redound to the benefit of the ones that are younger in the system.”

While a shrinking labour pool makes it more necessary to increase the retirement age, thereby extending the contribution of the elders in the labour force, it raises the question why is our labour pool shrinking?

“Is it because people are not inserting themselves in the labour force?” Traboulay queried. “I know a lot of hard-working people who are not in what you would describe as a typical labour force. They are entrepreneurial, they hop from job to job, they are income-earners, but it is not in the definition of a traditional labour force.”

He also noted that innovations in processes now include artificial intelligence and automation which could be displacing workers.

“Compound that with the fact that you may also, in the challenge of declining opportunities in the traditional way we understand professionalism, if you have that brain-drain problem that is re-accelerating, because we always had one, it says something about the national development and the mobilisation of talent.”

While there are many benefits, people in general are resistant to the idea of a retirement age of 65.

Legislation to be reviewed

According to the Pensions Act, which lays out the rules on pensions for people appointed to an office in the public service, the retirement age is 60. The act says the service commission may require an officer – anyone holding a portfolio in the public service – to retire from the service of TT at any time after the age of 60. In special cases one may retire at 50, but there must be medical proof that the officer is incapable by some reason of infirmity of mind or body to fulfil the duties of his or her office.

The Senior Citizens Pension Act says a person must be 65 to be eligible for a pension. It also says that a person must be ordinarily resident in TT for 20 years before claiming a pension and must be a citizen of TT.

The National Insurance Board says on its website that people qualify for its retirement benefit between the ages of 60 and 65 if one is retired, or at the age of 65 whether a person is retired or not. People are also eligible for the retirement benefit if they have made a minimum of 750 national insurance contributions.

Don't make it mandatory

In response to questions posed by Newsday on its social media platforms, many people believe that they should be able to spend the most possible time enjoying their retirement.

One person on Instagram in the 36-49 age group raised that point, saying that given the life expectancy of TT citizens, the retirement age of 60 would be best. Some do not even believe they will live that long.

“Considering that the life expectancy in this country is 73 and the health issues such as hypertension and diabetes that plague our 60 and up age group, people should be allowed to enjoy at least 10 years of retirement,” the Facebook responder said.

“I can’t imagine my 63-year-old mother waking up at 4.30 every morning to face traffic and head to an office for eight hours then head back home in the same traffic”

Another on Instagram, aged 60, said: “Retirement at 60 please. Tell my why they want people to work at 65? Give the younger workforce a chance to make meaningful contribution to society. We have toiled enough.”

A third commenter said retirement at 65 should be a choice.

“Not because a few people retire at 60 and are healthy and strong means that the majority would be the same.”

A Facebook poster said he was ready to retire once he is eligible for NIS and pension money.

“After 60 people have illnesses and can’t even work. It is time for them to relax,” the Facebook responder said.

Only one person out of the polls done by Newsday supported the idea.

“If science is allowing people to live longer, why not work for longer?” he said. “Yes, there are some drawbacks but there are also benefits to working more years. You’re able to stretch out your mortgage, loans and financing for longer.”