Comment: If more seniors are working, what is the relevance of the retirement age?

SINGAPORE: Last month, Prudential made the past of retirement age.

Prudential employees now have the option to stay in the company beyond their retirement age of 62, under the same conditions as they currently receive.

Abolishing the retirement age, as Prudential shows, is consistent with the changing economic and human landscape.

Increasing life expectancy around the world and an aging and healthy population are among the major factors. In Singapore, life expectancy increased from 76.3 years in 1995 to 83.1 years in 2017 and is expected to reach 85.4 years by 2040.

This demographic change will have a profound impact on organizations' management of human resources. However, this can also benefit the labor market in different ways.

READ: Live longer? Here's what the job looks like for 60 years, a comment

A MORE COMPETENT LIFE

First, it is widely accepted in political studies that longevity is correlated with better health. Advances in technology, health care and lifestyle changes are improving people's standard of living. In many developed countries, people take better care of themselves, physically, mentally and socially.

As life expectancy increases and health literacy and diet advances are decisive, we can expect our working population, while aging, to remain productive.

Secondly, recent studies have shown that longevity promotes the accumulation of human capital. The increase in life expectancy, coupled with lower mortality risk, leads to a better level of education.

This may be due to the fact that a longer life gives additional motivation to individuals to accumulate knowledge. An average person can now boast of a longer trajectory to capture the return of his investments in areas such as vocational training and education – and to obtain more educational qualifications in one or more fields.

This trend at the individual level generates national labor dividends, as countries with longer life expectancies tend to have a better trained workforce.

And as economies become more sophisticated, they push the demand for highly qualified people with diverse skills – a virtuous circle of economic development.

This reason could explain the recent phenomenon of individuals aged 20 to 30 taking a sabbatical year, changing domain or trying different things.

Since longevity reduces opportunity costs to avoid career mismatches and increases the net present value of training and retraining, young adults can take the time to develop their skills and information. their career choices in this competitive environment.

READ: Job seekers, do not settle for the second choice, a comment

Third, some skills improve with age. These so-called "age appreciation" skills include technical, written, oral and interpersonal skills, as well as teamwork, skills that are valued in the workplace, and even more skill-based areas.

Thus, a 62-year-old man today will likely be healthier, more educated and more qualified than 20 years ago – and better equipped to cope with new job demands.

DO YOU HAVE AN OLDER WORK?

Why then should we rethink the relevance of the retirement age? Supporters of a defined retirement age argue that it offers young people the opportunity to advance in their careers by retiring from the "old guard" and offering them options to enable them to withdraw from part-time or project-based work.

In Singapore, the Retirement and Reuse Act also makes the retirement age a guarantee for workers, as it is illegal for a company to ask an employee to retire before the age of 62.

READ: You can still retire at age 40, even with a longer life expectancy, a comment

But from the point of view of the older worker, retirement takes friction, prejudice and potentially lower wages and benefits when rehiring and concluding a new contract after the age of retirement. retirement, to his detriment.

Employers must offer to their 62 years and over a re-employment contract, but are not obliged to do so under the same conditions as before.

Our national retirement speech must keep in mind that in the next 10 years, our labor market will undergo profound changes.

Since 1990, the number of people aged 60 and over has more than tripled, with this group growing faster than the general population. More than ever, people in their sixties will be a big part of our demographic structure.

BENEFITS FOR ORGANIZATIONS, SOCIETY AND WORKERS

The dividends of a longer working life are to be reaped. While macroeconomic forces can force employers to retain older workers, firms benefit from more experienced staff with the know-how, skills and experience of the sector and can mentor younger workers.

READ: People ready to retire later, but preparing older workers will require more than requalification, a comment

Working longer also benefits workers and society, where studies have shown that work allows people to stay physically active, socially connected and mentally challenged.

According to recent studies conducted by INSERM, the government health research organization, the risk of developing dementia decreases by 3.2% per additional year of work.

These statistics alone should prompt Singapore to rethink the age of retirement, as health care for aging-aged seniors is expected to increase tenfold by 2030.

READ: Linking older workers to jobs: the key labor challenge for Singapore, a comment

Finally, mentalities evolve towards a more complete professional life. For example, the UK Social Attitudes Survey of 4,300 people aged 18 and over in 2015 found that younger people were more likely to say they planned to retire at age 70. .

While it may be premature to discuss the abolition of the retirement age, these developments should lead us to reconsider its relevance.

At the same time, companies that will follow in Prudential's footsteps will likely find themselves on the right side of the story in the future.

Dr. Nicholas Sim is a senior lecturer at the School of Business of the University of Social Sciences of Singapore.

Dr. Sabrina Heng is a research associate and principal visiting scholar at the University of Adelaide, Australia, and a lecturer at PSB Academy.