Early Retirement: Is there no end to it

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Early Retirement Is there no end to it?
Ageing Population - Burden or Benefit?

• Phil White Wendy Loretto
• The School of Management,
• University of Edinburgh

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Structure

• Introduction.
• State and Employer approaches to early
  retirement.
• Case Study - Employees views of early
  retirement.
• Conclusions - future directions/policies.

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1. Introduction
Early Retirement withdrawal from employment
before the normal retirement age. Other terms
include early exit, labour market
detachment, premature retirement.

• One of the most dramatic economic
• transformations of labour markets in
• modern industrial economies.
• (Rein and Jacobs, 1993)

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Economic Activity Rates, Older Men and Women in
Britain, 1951 - 2000 ()
1951 1961 1971 1981 1990 1997 2000 Men 55-59 95
.0 97.1 95.3 89.4 81.3 74.6 74.8 60-64 87.7 91.0
86.6 69.3 55.3 51.6 50.3 65 31.1 25.0 23.5 10.3
8.7 7.5 7.9 Women 55-59 29.1 39.2 50.9 53.4 55.0
53.2 57.6 60-64 14.1 19.7 28.8 23.3 22.8 27.0 25
.9 65 4.1 4.6 6.3 3.7 3.4 3.2 3.4 1951-1971
Taylor and Walker (1995) 1981-1997 Labour Force
Survey (1998) 2000 OECD (2001)
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2. Approaches of the State in the UK

• Phase 1 1945-1970s
• Encouragement to stay in employment.

Conditions governing pensions should be such as
to encourage any person who can go on working
after reaching pensionable age to go on working
and to postpone retirement and the claiming of
pension (Beveridge 1942).

• Phase 2 mid 1970s - mid 1980s
• Encouragement to retire
• Example Job Release Scheme as paradigm for
  period.

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• Phase 3 mid 1980s -1997
• Context of demographic timebomb

• Fifty-plus Jobstart 1988
• Employers Forum on Age 1996

• Phase 4 1997 - 2001
• Business rationale

• 1999, New Deal 50plus employment or training
  for
• older workers.

• 1999, (voluntary) Code of Practice on Age
  Diversity.

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• Phase 5 2001- date
• Evaluation of the Code
• Preparation for the EU Directive

3. Employers and Early Retirement
Early retirement facilitates (re)structuring of
the workforce in terms of age, gender, skills,
and other attributes.

• Seen as alternative to redundancy
• Voluntary er - best option in terms of
  individual fairness
• and industrial goodwill (IDS, 1998)

Funding of er aided by pension scheme surpluses
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4. Employees views of early retirement

• Questionnaire survey, conducted 2000
• Random selection of 2,000 staff from Finserv
• n 1,128 ( 55 response rate)

Gender composition 54 male 46 female.
Age profile Age group Male Female() 16-29
38 39 30-39 37 42 40-49 16 14 50 9
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• Women more likely to want to retire as early as
  possible less likely to
• wish to remain after 60 and more likely to say
  matter is too far ahead.

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A. Attitudes towards (early) retirement No-one,
irrespective of age, should be forced by an
employer to retire

• Points of note
• links with personal preference for retirement
• no differences with age or gender
• lower grade employees more likely to agree with
  statement

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No-one, irrespective of age, should be forced by
an employer to retire

• Frequency of reference to early retirement

(i) Agree If you are capable and willing, you
should be allowed to continue working. (Male,
42) Retirement is an individual lifestyle choice
and often not suitable for some people at the
same age as it may be for others. (Male, 36)
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(ii) Disagree An employer is in business
to make a profit, and if his business could
suffer by continuing to employ elderly staff,
then he must have the right to retire them.
(Female, 52)
Sometimes a gerbil on its wheel forgets that
there is more to life than work and needs a nudge
to get off. Sadly a few gerbils cant live
without their wheel, but most flourish that
again is life! (Male, 55)
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B. Exploration of ageism early
retirement Reminder our survey was of employees
(survivors?)

• Asked about colleagues experiences of ageism
• reported by 20 of sample (n221)

Points of note (i) Nearly 1/5 made a direct
connection between early retirement and ageism.
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(ii) 11 mentioned redundancy (especially connecte
d with restructuring) and bias towards OW.
(iii) 25mentioned experiences that may lead to
pressure to retire early.
Anyone over 30 tends to be moved from my
department to another department doing less
skilled work. This department has become known as
the departure lounge and the retirement
home. (Female, 28)
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(iv) 13 reported negative attitudes towards
older employees.
References to old brigade and dinosaurs.
Between 5 and 10 resignations (commonly thought
to be counselled out) during the past five years
of older members. Other colleagues referred to
as lacking the aggression and energy required
and as being insufficiently dynamic. (Male, 40)
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C. Discussion
(i) Early retirement is achieved directly (e.g.
volunteers) and indirectly (e.g. via stress,
lack of promotion etc).

• question degree of voluntariness?

(ii) Differences between employers commitment
(EFA) and employers policies.
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I have seen the way early retirement is
delivered. After 15-20 years with the company, a
cup of coffee in a hotel with no return to the
office for the employee. The company
believe/demonstrates belief that paying someone
one years salary and pension will soften the
blow. Good people have been treated like numbers
in a company which preaches we care about you.
Evidence shows otherwise. (Male, 48)
(iii) Influence of internalised ageism?
I have seen situations where older people are
perceived to be past their sell by dates and
this is reinforced when staff are retired early.
(Male, 45)
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5. Conclusions the way forward for early
retirement A. Voluntary approach/financial
economic forces

• Increase in economic activity rates of older men
• Increasing inability of workers to afford to
  retire early
• - reduced extent of fund surpluses
• - doubts about future stock market values
• - continuing shifts from final salary to money
  purchase.

With life expectancy growing longer, there is
simply more time for us to pay for. (Worsley)
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• B. Limits to laissez-faire
• Little apparent awareness among employers of
  govt policies
• Also little awareness of implications of
  demographic profile
• Market forces will impact only slowly and
  partially, if at all

• C. Law as remedy?
• Forthcoming EC Directive

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• D. Some problematic issues
• Will the UK retain or abolish contractual
  retirement ages?
• If the latter, how will this be enforced?

There may be justifiable reasons why an employer
cannot extend the retirement age. Indeed it might
be irresponsible to employ people over
retirement age. (CBI)

• Statutory protection for older workers may be
  detrimental
• Overt discrimination easier to tackle than covert

Final points
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Employer attitudes and policies towards older
workers will change only slowly.
If the benefits of employing a mixed-age
workforce are so self-evident, why dont
employers do it?