The retirement dilemma

Deciding on an ideal retirement age has proven difficult for both workers and governments. After the matter caused a quite sterile debate in Parliament, our government took the proverbial bull by the horns and announced during the budget presentation that it will continue its plans to raise the retirement age from 60 to 65.

We had no option. In fact, it would have been wise for previous governments to attempt to bring about this change in pension planning.

It is estimated that only 400,000 of the TT workforce of 600,000 make NIS contributions. With a large informal economy, that is hardly surprising, but it means only a third of the population is paying for state pensions. And, with people living longer, the fund is being depleted with insufficient additional contributions. The figures look bad.

In Europe, the French people demonstrated for months and resorted to extreme actions to fight for the freedom to retire at 60 and they failed to win.
La liberté did not prevail, the maths did.

Maybe the time has come to review the very idea of retirement. We have regarded it as a rite of passage after a busy working life. We look forward to putting our feet up after a successful but stressful career. Retirement follows on from marriage and children and home ownership and all the other milestones of modern living.

However, better food and health care and more exercise enabling people to live longer, has rendered the original notion of a cut-off retirement date passé.

There was a time before women became so integrated into the workforce that men worked till the magical age of 60, got a golden handshake or the classic watch or pen and then died within a couple of years. For many men retirement meant a terrible loss of status, and for their wives it also spelt a period of major adjustment, having your man underfoot with no purpose except to collect his monthly pension, if he was lucky enough to have one.

All that is changing and so we, too, should change how we think of retirement. In many countries governments have forced their people into delaying retirement age, driven by simple mathematics. The improvement in life expectancy is vast: on average it’s up from the high 60s to the mid- to high 70s and beyond, and there is simply not enough bounty to keep us all going.

Then there is the personal element. Retiring at 60 and having to contemplate what to do for another 20-30 years is daunting, especially when money has a way of disappearing and old age usually brings pecuniary disadvantage.

Also, a life of leisure and relaxation may seem immediately attractive but is rarely fulfilling or meaningful over two-three decades, even if you could afford it.

My aunt worked every day at a busy job till the age of 87, and a sharp brain at age 100 is the result, as well as a healthy pocketbook and a new lease on life.

There seems an obvious need to rethink how and when we retire and how we fund it to take good advantage of the post-work years.

Our government will not enforce the retirement age of 65, so TT citizens might be able to work and draw a state pension (like elsewhere) if employers see the advantage in preserving institutional knowledge.

In the UK, it is very likely the retirement age will increase to 68 for everyone, which will add the advantage of extra income from the available state pension to allow a top-up of personal pension pots.

It is a good model for TT to consider, since it reduces pressure on the state.

There is a strange anomaly in TT whereby people who are self-employed cannot make NIS payments. I do not think I missed any mention in the budget speech of correcting that obsolete, absolutely clear presumption that if our labour is not bought by a master, that it is either improper or worthless. A review of that curiosity is critical when we consider the shifting pattern of work, especially in the post-pandemic period.

Apart from people not wanting to return to the office, many younger people have a portfolio of jobs and move around, free to work when and where they choose. People in the cultural sector, too, are often self-employed, like those providing low-wage services, yet they cannot contribute to a state pension.

Most of them will not recognise the need to contribute to personal pension plans, so they are being relegated to poverty in old age, while the NIB loses all that extra funding.

Senior citizenship is expensive and financial provision is key to even a moderately happy retirement. The advice is to start planning while in our 40s, but we need adequate legislation and sound financial structures to enable us to do just that.

Editor’s note: Marina Salandy-Brown’s column will return on November 5