THE NEW OLD AGE:
WORK – RETIRE – PENSION
OR BACK TO WORK?

What are we doing about it in South Africa?

Rosebank Hotel, Rosebank
Tuesday, 9 May 2006

The New Old Age Conference took place at the Rosebank Hotel on 9 May 2006. The conference succeeded in providing a comprehensive overview of the challenges and opportunities faced by South Africans, looking towards retirement.

Following the success of this event, Omega has already been asked to organise a road show as a follow–up.

Thanks to the post World War II baby-boom, healthier and longer-living seniors are reaching retirement age in unprecedented numbers all over the developed world. Rock-bottom birthrates in those same countries mean there are far fewer young workers to take their place. The potential consequences for industrialised economies are now clear: shrinking workforces, soaring health costs and collapsing pension systems. All over Europe, governments are raising the official retirement age.

All these trends are forcing rich nations to rethink the long-held assumption that early retirement is a competitive advantage – because there is one unavoidable solution: Putting older people back to work. At DaimlerChrysler the share of over-45 workers will rise from 41% in 2002 to 68% in 2011; and the Ford Motor Co. expects that the number of workers older than 50 will double in its European plants by 2008. In Finland, the employment rate among those 60 to 64 has doubled. The result: lower pension costs, higher tax revenues and, Finland says, faster economic growth. The Finnish case now stands as a potential object lesson  for nations where government policy still pushes older citizens out of the workforce.

A reflection of the times is that in the US, a full third of recently retired seniors now go on to pursue a second career. And according to a survey by AARP, the top US lobbing and advocacy group for senior citizens, half of working-age Americans now expect to work into their 70’s, whether by financial necessity or by lifestyle choice. In Japan, 78% of baby-boomers between the ages of 55 and 59, say they plan to work beyond the official retirement age of 60. These trends are forcing rich nations to re-think the long-held assumption that early retirement is a competitive advantage.

The New Old Age Conference focused on the following issues:

- What is the situation in South Africa?
- What are expectations?
- How will our pension systems and funds cope with the ageing process?
- How are medical aid and medical funds going to manage?
- How does the transforming nature of the South African economy affect this trend?
- Given the shortage of skills, how can seniors with their skills and experience best be used?
- To what extent are corporates in South Africa adapting to this new reality?
- Where senior citizens want to work beyond conventional retirement, is anybody putting structures in place to assist or absorb them – as mentors, skill transferors, business angels, etc.?

Points to ponder regarding retirement:

- Less than 1 in 10 South Africans retire comfortably.

- With the latest medical interventions, people are living longer than ever before. This places a higher demand on scarce retirement savings.

- Research suggests that the amount spent on medical treatment after retirement is equal to that spent in the 65 years prior to retirement.

- It is estimated that in order to maintain your pre-retirement lifestyle you need in excess of 70% of your final salary as a retirement income.

- The experts say you should accumulate a lump sum of 10 – 15 times your highest annual salary, in order to retire comfortably.

These are all issues and questions which are relevant not simply to people who are already at the point of retirement but especially to working people in their 50’s; and professionally and commercially these are issues which clearly affect pension funds, insurance companies, human resource specialists and the Government, apart from corporate executives who are looking to the future of their companies.

Regarding the 50’s generation, an American survey found that 39% of Americans over 54 now doubt they will have sufficient money for old age! How do people in their 50’s feel about this issue? Merrill Lynch, has argued that “baby-boomers fundamentally will re-invent retirement.” They will, said the report, “cycle between periods of work and leisure well beyond the age of 65. While many will be focused on making extra money, many more say they will do it for the mental stimulation and challenge”.

The problems arising in “The New Old Age” are universal. This is a challenge also to South Africans, in business, the professions, government service and especially for individuals. How are we responding to the challenges? And how should we be responding?

Download the programme

Rosebank Hotel
Cnr. Tyrwhitt & Sturdee Avenues
Rosebank, Johannesburg
Box 5205, Saxonwold, 2132

For further details contact:
David Byrne
+27 (0) 21 689 7881
or
email davidb@omegainvest.co.za