Reassessing the age of retirement
Longer life expectancies and a lack of middle and upper management skills mean South Africa should reconsider its approach to retirement, says retirement expert Lynda Smith.
Smith, head of retirement consultancy Refirement Network and participant in the upcoming Retirement Expo, says: “We are still using outdated, industrial era retirement policies. They are not right for a 21st century world.”
She notes that people do not suddenly become redundant at age 60 or 65, and that older people have a wealth of knowledge and experience that could be of great value to organisations.
“But in many cases, companies have a retirement policy that says staff must retire at a certain age and there is no way around it. The concept of a retirement age needs to be retired,” she says.
Smith says that forcing staff to retire, where there is no wisdom continuity to fill the skills gap when they leave, is counter-productive.
“In the past, we saw people retrenched and taking early retirement in line with a BEE agenda.
“Then, when their skills were still needed, they came back as consultants, costing the company more and with no incentive to transfer skills to people within the organisation.”
Some sectors have been slow to transfer skills, Smith says, with the result that they now lack a younger corps of skilled workers or a middle management layer.
“For example, the average age of artisans in South Africa is 57. The older people are approaching retirement, but there are too few young and skilled people entering the field.”
With global life expectancy standing at 67.2 years, and South African life expectancy edging up to 60, hundreds of thousands of retirees can reasonably expect to remain healthy and productive well into their 70s.
Smith says there are currently about 2.9-million retirees and 8-million baby boomers in South Africa.
“The baby boomers are the first generation heading towards the retirement phase of life who could still have another 25 years of healthy life ahead of them, so they have many opportunities to add value,” says Smith. However, too many corporates are overlooking the benefits older employees can add, she says.
“When retirees apply for jobs, many recruitment agencies don’t even respond because of their age. And those who secure interviews may have been in the same jobs for so long that HR believes they don’t have enough experience of life.
“Sadly, there are no agencies looking to recruit older people, even though they can bring vast knowledge and experience into the organisation.”
Smith says many retirees are forced to keep working because of inadequate retirement savings, but many more simply want to continue working to enjoy a sense of purpose and being able to use their skills to make a difference.
“We find a lot of people go on to what we call ‘second life’ careers and we aim to inspire many more to do so. These are people who see an opportunity to embark on new lines of work or open new businesses in areas they are passionate about, using the skills they gained in their ‘first life’. They generally say it’s the best thing that ever happened to them.”
Not everyone is an entrepreneur, however. Smith says there are other ways for older people to remain actively involved in corporate life, keep earning money, and still ensure more free time and a more relaxed lifestyle.
“There are options such as phased retirement, where the retiree scales down the number of days worked per week. There is also job sharing, where one person works mornings only and one works only afternoons.
“Contract work is another opportunity and groups of retirees can also look to collaboration, where they could collectively offer a service to corporates.”
These options require companies to take a more open approach to the recruitment of pensioners, something Smith actively campaigns for.
Unfortunately, too many people find themselves isolated and unoccupied after retirement, she says.
“If people measure their worth by their work, they find retirement difficult,” she says.
“People who remain occupied and involved after retirement are less likely to become depressed and ill. As a retirement coach, I see that those who take on a new challenge are energised, happier and healthier. It’s a human thing to want to be needed, make a difference and have a purpose.”
The concept of retirement age, instituted by Prussian statesman Otto von Bismarck in the 1800s, aimed to provide a state pension annuity for citizens older than 70.
The retirement age, at that stage close to total life expectancy, was later reduced to 65.
The world followed Prussia’s lead, introducing mandatory retirement ages ranging from 50 (for women in China) through to 67 in numerous countries.
In South Africa, the generally accepted retirement age is between 60 and 65, while the age at which citizens qualify for a pension is 60.
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