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Scrap fixed retirement age, says uni professor
4:36pm Monday 10th February 2014 in News
A STUDY led by a University of Southampton expert has recommended the worldwide abolition of a fixed retirement age.
The report, headed up by Professor Yehuda Baruch, from the Southampton Management School, found that, on a global scale, current pension systems are unsustainable.
As a result it recommends the fixed or default retirement age be removed worldwide.
The UK abolished the default retirement age in 2011, although a small number of organisations can fix their own if they can justify it.
However, other countries still have fixed retirement ages.
Experts looked at the UK as a case study to examine the benefits and pitfalls of this more flexible approach to retirement.The results of researchers' financial analysis suggested that where a fixed retirement was in place the pensions system was not sustainable in the long-term.
It recommends other countries follow the UK's example.
Professor Baruch led the project working with Dr Susan Sayce from the University of East Anglia and Professor Andros Gregoriou from the University of Hull.
Professor Baruch said there was a global problem funding pensions, which assume people will retire in their mid 60s.
“Young people are tending to start work later and in-turn start paying tax and pension contributions later.
“Older people are living longer, often in to their 90s, creating, in some cases, up to 30 years of retirement to provide for with their cover.
“This creates a funding gap.The study, titled 'Retirement in a global labour market: A call for abolishing the fixed retirement age', said the abolition of the fixed retirement age would allow people to consider a range of options on how and when they retire and a more flexible pension, easing funding difficulties.
Professor Baruch said those behind the report would like to see people have more control of when they retire, so that if they want to work into their 70s and 80s, but change the type or amount of work they do, they can.
In order for this to happen, researchers said cultural attitudes towards older workers and the perception of their value and productivity would have to change to get older people into jobs.
“Our study suggests that old age can be seen as holding the prospect of long-term stable contributions to society, rather than a decline or preparation for giving up work altogether - which can lead to pressure on the public purse,” he added.