European Pension Costs Mean Insecure Retirements
By MICHAEL HODIN,
Posted: June 13, 2012
A new piece of research shows just how dismally the Europeans are thinking of their purported “golden years.” Aegon’s survey shows that of 9,000 people questioned across eight European countries and the U.S. almost three in four anticipate being worse off than those currently in retirement. Only 5 percent imagine a better retirement. In Hungary, a full 84 percent believe they’ll retire in worse condition than those who came before them.
The reason for this negativity? Simple: Only 12 percent of respondents think state pensions are going to remain affordable. But against this anticipated pension shortfall, almost half of survey respondents do not think retirement ages should be changed. While almost nine in ten support pension reform, they don’t support a re-imagined scheme of retirement.
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It is an incompatibility, to be sure, and Aegon CEO Alex Wynaendts offers a succinct assessment: “A concerted effort is needed to reconsider traditional retirement models and provide greater flexibility for phased retirement. If current pension systems are not adapted to the new realities of longer life spans and declining government and employer funding, the burdens placed on society will be a source of even greater economic and societal turmoil in the future.”
The Aegon survey says we’re trying to save the fruit while ignoring the tree’s dying roots. And we’re doing this even as people seem to accept a growing sense of responsibility. This adds either a level of irony or surprise to newly-elected French President Hollande’s move to rescind his predecessor’s retirement reform. Now the French no longer have to wait until a whopping 62 to retire. With the average French lifespan creeping into the 80s, they can again retire at 60. This, mind you, in a country with almost 30 percent of its population over 60 by 2030!
In order to create secure, healthy and happy retirements, we must create new ways to think about work and retirement. It’s wasteful to marginalize and squeeze out older workers, and it’s also economically unfeasible. With more people who will be over age 60 than under 14 by mid-century, we need to fundamentally rethink the assumptions that underlie our social, economic and political institutions.
How can we transform retirement so that “seniors” can continue to contribute to business and society at the highest levels? We need to recreate work and education so that aging workers can remain vital and on the workplace’s cutting edge. Physical fitness among seniors would also help the eurozone’s “fiscal fitness.” Maybe a senior soccer initiative would help the aging population realize they can be more than spectators.
As Europe struggles to keep Spain and the rest of the eurozone from tanking, Euro 2012 (the European Football Championship) has taken the continent by storm. Held every four years, the soccer tournament is more significant to the Europeans than the World Cup is to the Brazilians or the Super Bowl is to Americans. All things considered, Euro 2012 is doing a superb job of distracting an otherwise aging and fatalistic Europe. Greece has been on the tips of all European tongues not for its all but inevitable exit from the eurozone, but for its shocking underperformance on the soccer field against Poland. And the Spanish, who have put down protest paraphernalia for a little nationalistic fanatismo, have a very real shot at capturing their third Euro Cup. With Croatia and Ireland in their group, Spain’s road to the second round seems too good to be true.
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With Spain at a 24-percent unemployment rate and with 23 percent of its population past traditional retirement age, another Euro Cup victory may be just the diversion that’s needed. There must be something deeply cathartic about watching 20-year-olds running around and kicking a ball while the country’s social and economic institutions remain impossibly ill fit for today’s demographics.
Watch the face-painted Portuguese or the flag-waving Germans, and you might just be duped into thinking everything in Europe is fine. It isn’t, of course. Still, Europe remains happily distracted by Euro 2012. And, really, who can blame them?
Michael W. Hodin, Ph.D., is Adjunct Senior Fellow at The Council of Foreign Relations and Executive Director
of The Global Coalition on Aging.