Since 1951, life expectancy at 65 has increased substantially, going from 13 to 18 years for men and from 15 to 22 years for women. Meanwhile, the age of eligibility for pension benefits was reduced from 70 to 65 in the 1960s. The reform proposed in the last budget only partially corrects this anomaly. In order to avoid having a political controversy erupt over this issue with each new generation, Mr. Guérard suggests a more dynamic approach in which the age of eligibility increases automatically as a function of longevity.
Data from the OECD show that countries where the employment rate for older workers is high also enjoy a high employment rate for younger workers, and that where the one is low, the other is also low. This is at odds with the perception that the old are "taking jobs away" from the young. On the contrary, a society tends to be more dynamic when workers who have accumulated experience and developed skills remain active longer.
We need to find a balance between years worked and years of retirement. To keep the burden of pension benefits from becoming unbearable, increases in longevity must be accompanied by increases in years worked that nonetheless allow for a better harmonization of work, leisure and quality time with family. Furthermore, it is essential that we encourage ongoing training so that workers remain productive longer.
"The linear conception of the stages of life also needs to change. There used to be a fairly clear distinction between education, career and retirement. More and more, however, these stages overlap and retirement is being transformed into old age insurance. Already, 54% of Canadian workers see themselves working after the age of 65, either part-time or full-time. This represents a profound shift in the way people think about retirement," observes Mr. Guérard.
The Viewpoint entitled A new paradigm for retirement was prepared by Yves Guérard, an actuary who occupied the position of Secretary-General of the International Actuarial Association for thirteen years after having been Executive Partner at Ernst & Young Canada. The document can be consulted free of charge at iedm.org.
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