Extending retirement age could benefit elderly and economy, summer school told

Extending the age of retirement could be beneficial for the health and happiness of the older population and for the economy, the MacGill Summer School in Glenties, Co Donegal, was told yesterday.

During a discussion on the need for new approaches and a long-term policy for an "ageing and vulnerable population", Prof Alan Barrett said the ratio of older people to younger people was rising – leading to concerns about the sustainability of age-related social programmes such as pensions and health.

He said there was much debate about the options through which the sustainability of these programmes could be assured. “One option is to increase taxes and social contributions. While such an approach might form part of an overall solution, standard questions arise about the political acceptance of increased taxation and possible negative effects on economic activity,” he added.

Prof Barrett, an economist and director of the Economic and Social Research Institute, said “another option that is increasingly discussed is extended working lives”.

“If people remain in the workforce for longer, this would have positive impacts on national output, thereby increasing the tax base and making social programmes more affordable, as a percentage of GDP,” he added.

“In addition, to the extent that prolonged working lives would allow for the delayed payment of pensions, the sustainability of pensions systems could be further enhanced.”

Prof Barrett said that economists and others increasingly had questioned whether people were as happy in retirement as they seemed to expect. “There is a growing realisation that work provides benefits in addition to payment – including social interaction, purpose and stimulation,” he said.

He also challenged the notion that keeping older people in work created youth unemployment. “Research shows that economies are much more dynamic than suggested by this very static view. If managed correctly, economies can create more employment opportunities as extra people enter the labour force,” he said.

“During the recession, Irish people seem to have changed their thinking regarding the age at which they expected to retire. All of these points suggest the age of retirement can be changed,” added Prof Barrett.

He said research showed that retirement could be bad for mental health and that working later became a more positive experience if peers also worked later. “Bringing these points together, it seems reasonable to argue that we should begin to reimagine and reassess retirement, for reasons of social programme sustainability, but also potentially with a view to enhanced wellbeing among the older population,” he added.

On a similar theme, Prof Ian Robertson, professor of psychology at Trinity College Dublin, compared workers in the United States, where people work longer, with those in France, who can retire early.

He said research showed Americans in their 60s were 5 per cent less smart than Americans in their 50s, as would be expected as cognition decreased with age. But, in France, the research shows people in their 60s were 20 per cent less smart than those in their 50s.

Prof Robertson added that people who retired early were “significantly” more likely to develop Alzheimer’s disease than people who worked on to 65.