Retirement age raises may not affect real age of retirement

[Tiriol]

... according to Dr. Kari Puro, as reported in Helsingin Sanomat online newspaper. The article is related to recent developments in Finnish retirement policies, but it may have relevance to other countries, as well.

Dr. Kari Puro does not expect raised retirement age to affect real age of retirement

The decision by the government of Prime Minister Matti Vanhanen (Centre) to raise the minimum age of retirement to 65 could end up being largely without any real impact.
“In the past, an absolute increase in the age limit has not led to a real increase in the age when people retire”, says Dr. Kari Puro, who has been a key figure in promoting changes in Finland’s work pension system in the past couple of decades.
Before he retired himself, Puro headed a pensions working group with members mainly from Finland’s central labour market associations.
Both Puro and the labour market organisations agree that the time that people in Finland stay at work should be lengthened. He says that decisions that have already been made have had a positive effect in this regard.

In the pension reform of 2005 people were given the possibility to retire flexibly between the ages of 63 and 68 at a time of their choosing.
The system contains a carrot, under which the annual accrual of pension funds will increase the longer a a person stays at work. On the other hand, the so-called life expectancy coefficient will start cutting monthly pensions the longer a person remains at work.
The decline in pensions caused by the coefficient can be offset by working longer
Puro says that the effects of the accrual rules and the flexibility are positive. “Employment among the ageing 55-65-year-olds has dramatically grown, almost doubled. This has had a significant effect on the goal that Vanhanen’s government seeks with its decision - a real increase in the retirement age”, Puro says.

The influence of the life expectancy on the length of working careers is not known, because the coefficient will have its first impact on pensions in 2010.
“The government cannot know what kind of an impact the life expectancy coefficient has had. It did not wait and see if this might have been enough”, Puro says. He feels that the government cannot have any facts available on a possible positive impact of its pension reform on the lengthening of the time that people remain at work.

Puro feels that one negative effect of the government’s decision is that it will narrow the possibility of the individual to choose when to retire.
Esa Swanljung, managing director of the Finnish Pension Alliance TELA, fears that setting a minimum age of 65 will lead to a rush of people seeking early retirement.
Swanljung says that previous experiences of increased age limits have been negative. “It is also our goal that people should stay at work, but the model that the government is putting forward is wrong.”

A fresh opinion poll shows that a majority of Finns are opposed to raising the minimum retirement age to 65. A survey commissioned by the Finnish Broadcasting Company (YLE) found that 62 per cent opposed raising the retirement age, while about one in five were in favour of the move.
The greatest amount of support for raising the retirement age came from respondents who support the conservative National Coalition Party. Nearly a third of supporters of the Centre Party were also in favour of the change.
Supporters of parties of the left were most clearly opposed to the government’s plans.
Those with higher incomes had a slightly more positive view of a higher retirement age than those with low and medium incomes.

I'm not opposed to raising the retirement age, considering the fact that there will be more and more older people than the young and that people's health has increased significantly (and thus their life expectancy) when compared to the time when the legislation concerning retirement was first introduced. However, Puro does raise interesting points and I also happen to feel that the government has handled the introduction of this possible retirement age raise quite poorly (and it has driven trade unions into a near-frenzy). It gives us more insight into government's (lack of) marketing skills rather than into the retirement age question itself, however.

What are your opinions? Is (flexible) retirement age of 63 enough, or should it be raised? And what effects it might have?

[Count Chocula]

From what I've seen in the US, raising the retirement age simply raises the time when a retiree can start drawing Social Security or pension benefits, which would benefit the Social Security Administration or pension fund (public or private), by reducing their committed payouts. In other words, it seems like a way to screw those who could have retired at 63 out of two years of benefits.

Having said that, I've noticed that a lot of private sector workers in the US fully expect to work beyond 65, myself included, so the impact of such a ruling here in the US would primarily affect those with mandatory retirement ages, like airline pilots or government employees.

[Edi]

Finland has one of the lowest retirement ages in the world, it was lowered from 65 to 63 at one point, but this raising of the age back to what it used to be is no big deal in my opinion. The unions are obviously raising a stink about it, but they would have done so even if someone had merely raised the idea instead of directly introducing it as a legislation proposal.

As has been pointed out, life expectancy has risen by several years since the whole pension thing was implemented and some kind of reform is going to be required. Needs to see where the goes, but it's early yet.

[Fingolfin_Noldor]

Does Finland have a mandatory retirement age? Because odds are, retirement ages are otherwise determined by market requirements. It's often cheaper to hire a young chap than retain an old worker.

[Broomstick]

Did this study take into account the economy? When people retire is significantly impacted by their own resources as well as pensions plans, at least in the US. With the economy tanking and private investments (IRAs, 401(k)'s, etc.) trashed, a lot more people are opting to stay at work rather than retire early because they are concerned about avoiding poverty. There's also a slew of retired people returning to work because their investments crashed and they now need income again.

[ray245]

Does Finland have a mandatory retirement age? Because odds are, retirement ages are otherwise determined by market requirements. It's often cheaper to hire a young chap than retain an old worker.

On the broader economic perspective, requiring to state to take care of a growing population of retirees will only prove to be drain of resources. It is wise to keep the population of the retirees as low as possible.

It may seem cheap for the nation as a whole to hire a young chap until you realise that young chap has to contribute more for the sake for the retirees. In most cases, the retirements savings you have today may allow you to retire and enjoy a decent life, until you realise in most cases, the cost of living will continue to rise in your nation.

[Edi]

Did this study take into account the economy? When people retire is significantly impacted by their own resources as well as pensions plans, at least in the US. With the economy tanking and private investments (IRAs, 401(k)'s, etc.) trashed, a lot more people are opting to stay at work rather than retire early because they are concerned about avoiding poverty. There's also a slew of retired people returning to work because their investments crashed and they now need income again.

It applies to Finland, factors typical to the US labor market have not been considered unless they also apply here. I expect that during tough times people will be willing to work longer, but nobody will be left starving out in the cold even if they don't have a lot of resources. There is much less risk of retirement savings being wiped out here because they are not tied to company stocks and investing pension fund moneys is severely regulated.

[Fingolfin_Noldor]

On the broader economic perspective, requiring to state to take care of a growing population of retirees will only prove to be drain of resources. It is wise to keep the population of the retirees as low as possible.

So what do you suggest? Forced Euthanisation? Did you actually think about that through your head?

It may seem cheap for the nation as a whole to hire a young chap until you realise that young chap has to contribute more for the sake for the retirees. In most cases, the retirements savings you have today may allow you to retire and enjoy a decent life, until you realise in most cases, the cost of living will continue to rise in your nation.

Again what do you suggest? Even if corporate taxes are raised, companies still save more hiring younger people. This is a fact. The only way to be even at least half assed about raising retirement age is to introduce mandatory retirement ages. Jobs will only exist so much as there is a need. Companies do not give a fuck whether you rot or become useless since they can just fire you. Or, the powers to be that will give you a job for free or you happen to MM fucking Lee who goes creating job titles for his own fucking self. Did you know that companies actively encourage early retirement in many cases as a form of retrenchment to save money?

[ray245]

So what do you suggest? Forced Euthanisation? Did you actually think about that through your head?

Hell no, simply increase the retirement age to 65 is the least we can do in status quo while improving our medical technology to allow people to stay fit enough to work at a older age. Of course, things like improving medical technology is easier said than done, but it is a goal nonetheless.

In no way did I expect a magical solution that would fix the whole issue altogether.

Again what do you suggest? Even if corporate taxes are raised, companies still save more hiring younger people. This is a fact. The only way to be even at least half assed about raising retirement age is to introduce mandatory retirement ages. Jobs will only exist so much as there is a need. Companies do not give a fuck whether you rot or become useless since they can just fire you. Or, the powers to be that will give you a job for free or you happen to MM fucking Lee who goes creating job titles for his own fucking self. Did you know that companies actively encourage early retirement in many cases as a form of retrenchment to save money?

I'm not fully sure but things like tax relief for companies that seek to retain older employees may work perhaps? Letting those companies save some amount of money through tax relief? The most we can do is to encourage a Company to be less rash in regards to dismissing the older employees by giving these companies some tangible benefits.

Although determining the amount of money lost to those tax relief against the additional taxes the government can get from more people in their older age continuing to work is not an easy task to begin with.

EDIT: Wording issues.

[Darth Wong]

On the broader economic perspective, requiring to state to take care of a growing population of retirees will only prove to be drain of resources. It is wise to keep the population of the retirees as low as possible.

So what do you suggest? Forced Euthanisation? Did you actually think about that through your head?

Did you bother reading the OP at all? Or even the title of this thread? What the fuck is wrong with you?

[ray245]

On the broader economic perspective, requiring to state to take care of a growing population of retirees will only prove to be drain of resources. It is wise to keep the population of the retirees as low as possible.

So what do you suggest? Forced Euthanisation? Did you actually think about that through your head?

Did you bother reading the OP at all? Or even the title of this thread? What the fuck is wrong with you?

Well, most people have a habit of calling me an idiot again and again, so...

[Tiriol]

Does Finland have a mandatory retirement age? Because odds are, retirement ages are otherwise determined by market requirements. It's often cheaper to hire a young chap than retain an old worker.

Some professions have (for example, airplane pilots have a mandatory retirement age at 60). The governmental pension plan for retiring because of old age assumes that you retire at 63 in earliest, at 68 in the latest; however, I don't think it's an actual mandatory retirement age.

[Broomstick]

Sounds somewhat like the US social security system, where you can start collecting as early as 62 (with reduced benefits for your lifetime), the set rate at 65, and if you hold out until 70 or later you get increased monthly benefits. This does tend to encourage the healthy to keep working, though not always.

[His Divine Shadow]

I am not opposed to the raising of the age at all, I've been expecting it for some time. On a somewhat OT tanget I am getting a lot of schadenfraude out of this, I've seen so many people who usually pontificate about "taking responsibility" and giving up stuff for the good of society and what not whine about this and I so enjoy it. It's such a nice demonstration that their enlightened selflessness only applies as long as it's not something that affects them personally! They sure can talk about what others should give up though!

I'll work as long as I possibly can, I am under no illusion that we can keep this system the way it is.

[Tiriol]

I am not opposed to the raising of the age at all, I've been expecting it for some time. On a somewhat OT tanget I am getting a lot of schadenfraude out of this, I've seen so many people who usually pontificate about "taking responsibility" and giving up stuff for the good of society and what not whine about this and I so enjoy it. It's such a nice demonstration that their enlightened selflessness only applies as long as it's not something that affects them personally! They sure can talk about what others should give up though!

I'll work as long as I possibly can, I am under no illusion that we can keep this system the way it is.

I don't know about schadenfreude; personally, I'm just seeing the old fact "No one surrenders his benefits without fight." being realized once more. Many of these protesters are those who took the retirement age of 63 for granted and treat this proposed legislation as a slap to the face. It doesn't help that it was apparently planned in secret. That is one good reason for governmental transparency: when legislation initiatives are done in open and so that everyone can see their process, it should minimize the ruckus (alhough, as Edi said, the trade unions were bound to go in a frenzy; apparently some are now planning a general strike, a move unseen since 1956).

For what it's worth, I also plan to work as long as I can. However, what do you mean by "this system"? The retirement age? Something else?

[His Divine Shadow]

Maybe I am just a bitter and cynical old (<30) person *shrug*

I was referring to the whole retirement system, young people are staying longer in school and people are living longer and the population as a whole is growing older. Let's also consider the implications of the current econmic crisis and what longterm effects it might have, lets also consider the fact that cheap oil is probably not coming back once this recession is over and so forth and so forth.

I dunno, I'm not really expecting to see much of a pension or benefits once I'm 65, maybe I am just being pessimistic but oh well maybe I'll get a positive suprise...

[Tiriol]

Maybe I am just a bitter and cynical old (<30) person *shrug*

I was referring to the whole retirement system, young people are staying longer in school and people are living longer and the population as a whole is growing older. Let's also consider the implications of the current econmic crisis and what longterm effects it might have, lets also consider the fact that cheap oil is probably not coming back once this recession is over and so forth and so forth.

I dunno, I'm not really expecting to see much of a pension or benefits once I'm 65, maybe I am just being pessimistic but oh well maybe I'll get a positive suprise...

Ah, the whole retirement system. Thank you, that clears it up nicely.

Yes, I'm inclined to agree with you: the current system isn't sacrosanct and it can and probably should be changed to accomodate the changes in society and economy. I'm especially thinking about the lower birth rates (which are bound to make a nice big mess of things if we don't give them a more detailed and thorough look at society-level) and, of course, the fact that so many people will be collecting pensions it will not be funny.

[Edi]

I'm also looking at it from the whole system perspective and it's an automatic given that the unions will oppose any changes whatsoever to the system that will in any way reduce anything they see as a benefit. The whole fucking "saavutetut edut" shit they have been doing forever.

The unions are necessary, but sometimes on these issues they are too inflexible and shortsighted. It's not just the pesnion system that needs overhauling, but a lot of connected issues as well or we'll be in a big heap of shit in a few of decades.