Not so retiring

I recently attended a small discussion with a group of United States university professors, and I suddenly realised that all of them were over 60 years old, and about half of them well over 65. All were however still active as full-time teachers and researchers. That all of these academics were in this age group was a coincidence, but in the United Kingdom (or Ireland) it could not have happened at all. The reason why it can in the United States is because mandatory retirement for academics was abolished in 1993. Some argue against the retention of this practice – sometimes using arguments that used to be deployed in very similar form against the idea of allowing married women to continue to work – but on the whole the principle is now well established in America.

Over here we are still much less flexible, and usually the system forces older people out of employment, except to the extent that it may not always prevent their working in return for receiving much less or even no pay. But leaving aside the fairness issue, do we not in any case need to re-examine our retirement assumptions? The idea of the old age pension originated in Bismarck’s 1889 law Gesetz zur Alters- und Invaliditätssicherung. This kicked in at the age of 70, at a time when the average life expectancy of those who had reached this age at all was 73. In Britain pensions were introduced in 1909, and again the pension age was 70. It has been calculated that if one were to apply the same actuarial considerations to today’s population, the pension age would be 76 (some have even suggested it would be higher, possibly over 80).

The retirement age has become a major casus belli in discussions about social benefits and in industrial relations negotiations. In France, improbably, the retirement age has actually been lowered recently. But leaving aside what one might call the welfare state aspects to this question, it could be asked whether we are well served by a system that forces people out of the labour market because of their age, and more particularly, whether in our universities we are impoverishing the quality of our pedagogical and academic offering. Is it time to think about abolishing mandatory retirement in our system of higher education?

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Higher education’s ‘bad ideas’?

According to Larry Summers, former President of Harvard University and a senior politician in both Bill Clinton’s and Barack Obama’s administrations, higher education suffers from some ‘bad ideas’. Two of the perhaps surprising ones he lists in an interview with the Washington Post are the end of mandatory retirement in US universities, and small group seminars.

In relation to mandatory retirement, Summers argues that as tenured professors hang on into their old age the average age of the academic staff rises, disconnecting them from the young student body.

The problem with small group teaching, he suggests, is that ‘professors are loathe to give bad grades to students they see at the other side of a table every day.’ In other words, he believes that teaching a small number of students makes it difficult to treat them objectively, and this in turn stokes grade inflation.

Larry Summers is not a typical spokesperson for the academic community, but on the other hand he has a ready audience for his statements. So then, is he right in relation to these points? It has long been my view that the compulsory retirement of academics (and others, for that matter) is now hard to justify. But of course an older average age follows – and does this indeed create an academy to which students will find it hard to relate? And have we been wrong all along to seek to defend small group teaching? Or could it be that better grades flow from the better attention students get, rather than from familiarity?

Should we abolish compulsory retirement for academics?

Here is a story from Australia. There are reports that the ageing academic population there is creating a time bomb for higher education. Over half of lecturing staff are over 50 years old, and as they move towards retirement there may be insufficient resources to replace them; and indeed the visible crisis in higher education is in any case prompting young people to look for other careers.

This is not a uniquely Australian problem. The age profile of academics in a number of countries and in several universities is a cause for concern, and I believe that it is true that lecturing is now a much less attractive career for those coming out of education. Of course we need to address this in a number of ways, but one option should be to look at the end of compulsory (as distinct from voluntary) retirement in universities. In the United States this has already been done, and the impact has been positive. Is it time to think again over here?

Working longer

DCU is a young university, and one of the consequences is that it has a younger community of staff. In my last job in the University of Hull I was Dean of a Faculty, and typically we would have retirement functions for members of staff four or five times a year. In DCU, for the entire university, I have attended fewer retirement functions (and I do attend them all) in ten years than I did for one Faculty in Hull during three years. But right now the generation of entrepreneurial and determined colleagues who were there when DCU admitted its first students, and most of whom have stayed extraordinarily loyal to the institution, is approaching retirement age, and some of them have already embarked upon this new phase of their lives. On one of the occasions when we were celebrating their careers and wishing them well, a colleague who was retiring confided to me how she had dreaded this moment and how she wished she could still continue to work. And she remarked that one of her friends, an academic in the United States, was five years older than her but was still staying in her job with no intention of retiring any time soon.

Yesterday it was reported that the government will gradually phase in a new pensions and retirement framework under which the minimum state pension age will be raised from the current 65 to 68, albeit several years from now. Some of this is related to the fact that the taxpayer simply cannot any longer afford to pay pensions for everyone, in particular in the light of changing demographics and a tendency to live much longer. But is this enough? Is the idea of the compulsory retirement age (whatever that age might be) not now an anachronism? Indeed, is it fair? Should we not allow those who want to work longer to do so, as long as they are fit and able? In fact, should retirement not be an entirely voluntary decision?

Over 50 and still going strong

I have to be honest and tell you that I passed my half-century a few years ago. I’d like to think that I still have youthful good looks and could pass for a much younger man, but that got punctured the other day when a small boy passing by on a bicycle with his father said to the latter that he should ‘watch out for the old man’, and as I was the only one there, well, he meant me. And so I have to come to terms with the idea that I am now at an age past the point at which, some 35 years ago, I believed senility began. Maybe I should be looking closely at Saga holidays and organising Bridge evenings. Shoot me now!

But actually, as the demographic make-up of society changes continuously, there are serious things to consider here. Earlier this year in a post here I suggested that we might need to look again at compulsory retirement ages. And at the same time, I feel we need to look at the contribution universities make to the employment of slightly older people. Right now, as part of the public sector cost cutting exercise under way in Ireland, we are being prompted to encourage people close to retirement age to go early, thereby reducing the pay bill. Is this what we should be doing?

In the United States a survey was conducted recently to identify the best employers for employees over 50, and interestingly three of the top 10 were universities. Indeed, the top-rated employer was Cornell University. There should be a lesson in this for us. I believe that those who still feel fit and mentally agile and who have passed retirement age can still make valuable contributions to higher education, and indeed may be particularly conscientious teachers and researchers. So perhaps we should think again about whether we can or should apply a retirement and pensions policy that we really cannot afford, and which may deprive society – and in our case higher education – of some of its most valuable contributors.

Facing up to the pensions crisis

As recently as last August, the UK human resources journal Personnel Today had an article suggesting that ‘defined benefits’ pension schemes could make a comeback, and that the funding crisis that had made many employers close off such schemes to new employees might be over. Well, forget all about that. Today the BBC reported that the Pension Protection Fund declared a deficit in British pension schemes of £195bn. And on RTE this morning Pramit Ghose, of Bloxham Stockbrokers, predicted that some defined benefits pension schemes may actually have to be wound up.

Of course a lot of this is due to the current global financial crisis, which continues to turn the world upside down. But then again, we have been talking about problems in funding pension schemes for some time, and notwithstanding the bit of counter-intuitive optimism last August, it has seemed inevitable for a while that we cannot continue with many of our assumptions about how to fund retirement.

No doubt we are going to have lots more analysis over the next while about what should be done – prompted in part by global financial conditions and in part by the inevitability of fund-specific issues as companies experience difficulties or become insolvent; today’s story about pensions for Waterford-Wedgwood employees is an example.

In the end, however, the issue isn’t really what kind of pension scheme is appropriate or ideal; the issue is that we have for some time had demographic trends that make it impossible to fund retirement, whatever type of pension fund may be used. We are not really going to solve this until we face up to the fact that Bismarck’s pension and retirement framework cannot succeed any more in the 21st century, and that we have to abandon the concept of compulsory retirement at 65 or less. Unless we do that, we are going face growing problems in allowing older people to live their lives in some degree of comfort, and we are going to have a guaranteed explosion of failed pension funds and public exchequer liabilities that the taxpayer cannot afford. Time is running out.

Birthday

It is just coming to the end of my birthday – and don’t say anything to me about it, it’s nearly over. On the whole I try to ignore my birthdays and pretend that the years are not rolling by. And typically as I wake up on June 30th, I tell myself that I look and feel younger than when I was 30; we all have a wonderful capacity to deceive ourselves. For all that, I am not given to worrying about my age. However, for a little while (and I won’t say how much of a little while) I have become aware that more than half of my working life is over, and that retirement is closer to me than are my student days. And because retirement is not a favourite item in my toolkit, the thought doesn’t please me.

It is, I think, time that we looked again at the whole concept of retirement. It was of course a great social advance when it was introduced as a social security measure in Bismarck’s Germany, but on the other hand the actuarial calculation that set the appropriate retirement age at 65 is now wholly inapplicable. We live longer, we are active much longer, and materially we expect much more. Therefore it has become quite simply unaffordable to put everyone on a pension, however funded, at 65. Neither private pension schemes nor the state’s social security system can manage to make the sums add up. The result is that increasingly people will have to retire without reasonable financial security, and that is madness. So for some time I have stopped trying to find arguments in favour of the traditional retirement pension framework.

I still do believe that those who really want to retire in their late 60s should be allowed to do so; but we should make that affordable by allowing (and occasionally encouraging) those who do not wish to retire to continue working. This will also help us deal with some impending skills shortages in key areas.

If you have your heart set on retiring at 65 and travelling around the world, good luck to you, and you should be allowed to do that. But if you want to continue as an economically active member of the community, whether in employment, in business or in whatever way you wish, then that should be possible too. We would all be the winners.