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Older societies will have to retire later

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First published: Financial Times, 20/07/2009

The UK High Court is considering whether to abandon the default retirement age of 65, and is expected to rule in the autumn. The government plans to conduct its own review in 2010. Abolition would be a big step forward in facing the challenges of our ageing society. It would be noted in other nations, many of which still encourage people to retire in their mid-50s.

The debate about longer working lives is normally framed in terms of the rights or the capacity of individuals to do so. Many people agree that older people should have the right to work if they want. Improvements in health and life expectancy, along with the nature of the information economy, make this increasingly possible.

However, this debate goes further than humanitarian issues. It is forcing us to think about the unique change in age structure that is evolving and how we can deliver economic growth in the future, given the forthcoming waves of retiring baby boomers, who will not be replaced in the workforce by their progeny.

Average life expectancy at birth in advanced economies is expected to rise from 77 to 83 in the next few decades. The population of over-65s is expected to double, while the number of over-80s will grow even faster. Meanwhile, low birth rates mean the working-age population will grow slowly or decline. The resulting rise in dependency of the over-65s on the working age population will be unprecedented…more