Funding retirement

Compulsory personal saving is seen as the preferred solution for funding retirement costs in this extensive study of 21,000 individuals across 20 countries, covering the rich West as well as urban 'trendsetters' in transitional economies. Governments should enforce individual saving rather than raising taxes or expecting people to retire later.

by HSBC
Last Updated: 23 Jul 2013

This desire by individuals for help in helping themselves may reflect a lack of confidence in governments, with just one in five people expecting the state to look after them financially (against one in three thinking this should be a role for the state). Nor are people looking to employers or former employers, with just 5% of individuals thinking these organisations should bear most of their retirement funding costs. Surveyed employers, on the other hand, feel more responsible (or perhaps just believe they will be held financially responsible); nearly one in five companies globally think they should and will bear the greatest burden.

Most individuals in most countries think there shouldn't be a mandatory retirement age, believing instead that employees should be able to go on working for as long as they are able to do a job well. But despite pension funding pressures, greater longevity and an ageing workforce, in much of the world ideal retirement ages are still seen as a relatively youthful 61 for men and 57 for women. Of the major economies, only Japan and the US think retirement should be later: 65 for men and 64 for women. However, many older workers are also looking for more flexible retirements, which include part-time work or even alternating between periods of work and leisure in later life. For some, working past traditional retirement ages is about financial need, for others about having something meaningful to do, keeping busy, or social interaction.

But while many may want to work or carry on working, opportunities are still limited. Most employers recognise that older workers are more loyal and reliable than younger employees, and just as productive and motivated. But many do little to attract and retain this group.

Research in Europe and North America indicates that older workers are more likely to be targeted for redundancy in recessions (and are then unlikely to find other work). Employers also exclude them from training and retraining, despite the fact that they are less likely to change jobs than younger workers. Many still have mandatory retirement ages or regimes that encourage early retirement.

Ageing workforces and associated skills shortages will increase the pressure on employers to improve their practices. Companies agree that they should be doing more to allow older workers to reduce their hours and do less physically demanding work. Mentoring of younger workers (which most employers claim they already do) and other programmes aimed at transferring experience from older workers could also be made more systematic.

The future of retirement
HSBC, 26 April 2006.

Reviewed by Steve Lodge.

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