SINGAPURA: Last month, Prudential made retirement age a thing of the past.
Employees at Prudential now enjoy the flexibility to remain in companies outside the 62-year retirement age and can do so under the same terms and conditions as they currently receive.
Getting rid of retirement age, as exemplified by Prudential, is consistent with changes in the economic and human landscape.
The main thing among these drivers is the global increase in life expectancy and an aging but healthy population. In Singapore, life expectancy has increased from 76.3 in 1995 to 83.1 in 2017 and is projected to reach 85.4 years by 2040.
This demographic shift will have a profound effect on how organizations manage human resources. However, this can also benefit the labor market in various ways.
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LIVE WITH MORE SKILLS
First, it is widely accepted in policy studies that longevity correlates with better health. Advances in technology, health care and lifestyle changes provide people with a higher standard of living. In many developed countries, people pay more attention to themselves, physically, mentally and socially.
Thus, with increasing life expectancy and breakthroughs in health literacy and diet, we can expect our workforce, even though it is old, to remain productive.
Second, recent research shows that longevity encourages accumulation of human capital. Increased life expectancy, with a reduced risk of death, leads to higher educational attainment.
This may be because a longer life provides additional motivation for individuals to gather knowledge. The average person can now have a longer trajectory to capture the return on their investment in things such as skills training and education – and obtain more educational qualifications in one or more fields.
This tendency at the individual level reaps national labor dividends, because countries with longer life expectancies tend to have a more trained workforce.
And as economies become more sophisticated, they encourage demand for highly qualified individuals with a variety of skills – a good cycle of economic development.
That reason might explain the latest phenomenon of individuals in their 20s or 30s who take years of pauses, switch fields or try different things.
Because longevity reduces opportunity costs to avoid career mismatches and increases the net value of current training and retraining, younger adults can take the time to hone their skills and inform their career choices in this competitive environment.
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Third, some skills increase with age. These so-called "age-honoring" skills include technical, writing, oral and interpersonal skills, and teamwork, valued skills in the workplace, and even more in the future as a mature economy moves away from industries that physically demand knowledge and skill-based sectors.
So a 62-year-old currently might be healthier, more educated and skilled than 62 years ago 20 years ago – and more prepared to meet the demands of a new job.
DOES HAVE WORKERS MORE RETURNS OF FIXED MONEY?
Then why should we reconsider the relevance of retirement age? Advocates of the prescribed retirement age argue that it provides opportunities for young people to advance their careers by stopping "old guards" and giving them the option to go down to part-time or project work.
In Singapore, the Pension and Employment Law also makes retirement age a protection for workers, because it makes it illegal for companies to ask an employee to retire before 62.
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But from the perspective of older workers, having a retirement age introducing friction, bias, and potentially reducing wages and benefits when rehired and wearing new contracts after retirement age – harms them.
Employers must offer back jobs beyond 62 on a contract basis, but are not required to do so on the same terms and conditions as before.
Our national discourse on retirement must be remembered that in the next 10 years, there will be a dramatic shift in our labor market.
Since 1990, the number of people aged 60 years and over has more than tripled, with this group increasing at a faster rate than the general population. More than ever, people in their 60s will become a big part of our demographic structure.
BENEFITS FOR ORGANIZATIONS, COMMUNITIES, AND WORKERS
Dividends from longer working lives for us to harvest. While macroeconomic forces can force employers to retain older workers, companies benefit from having more experienced staff who have industry knowledge, skills and experience – and can guide younger workers.
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Long work also benefits workers and society, where research shows that work makes people physically active, socially connected and experiencing mental challenges.
In particular, the risk of dementia was reduced by 3.2 percent with each additional year of work, according to a recent study by INSERM, the French government's health research institute.
These statistics alone should encourage Singapore to rethink the retirement age because elderly care related to elderly care is projected to increase 10-fold by 2030.
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Finally, attitude changes towards a fuller working life. For example, the 2015 UK Society Attitude Survey, which included around 4,300 people aged 18 years and over, found that younger people were more likely to say they hoped to retire in their 70s.
Although it may be too early to discuss eliminating retirement age, this development must cause us to reconsider its relevance.
Meanwhile, companies that are following in Prudential's footsteps here are likely to find themselves on the right side of history in the future.
Dr. Nicholas Sim is a senior lecturer at the School of Business, Singapore University of Social Sciences.
Dr. Sabrina Heng is an associate researcher and visits senior researchers at the University of Adelaide, Australia, and associates lecturers at PSB Academy.