Retire at 56?
There is no doubt that the world population is aging. According to the United Nations’ landmark study “World Population Prospects: the 2017 Revision,” the number of older persons — those aged 60 years or over — is expected to more than double by 2050 and to more than triple by 2100, rising from 962 million globally in 2017 to 2.1 billion in 2050.
In the Philippines, the Commission on Population said the number of elderly Filipinos or those over 60 years old is projected to increase by 0.23 percent over 2017, and will most likely comprise over 8 million Filipino senior citizens by the end of the year. This will constitute 8.2 percent of the country’s total population. Of this figure, 5 million will be aged 65 and older, or 4.7 percent of the country’s population.
Without a doubt, the global population of aged 60 or over is growing faster than all younger age groups.
But does it mean we should retire at 56?
The late Ako Bicol party-list representative Rodel M. Batocabe, along with his colleagues Alfredo A. Garbin Jr. and Christopher S. Co, thought so. They filed on June 30, 2016, House Bill No. 136, called “An Act Reducing the Optional Retirement Age to 56 years old.” In the bill, the three claimed that it is an “… established fact that at age 56, age-related ailments and other physical limitations are already experienced, thus, benefits and special privileges are but necessary (Tubianosa, 2016).” In their explanatory notes, the three representatives also said the bill will harmonize the retirement age across all government employees as well as private employees, using the Armed Forces and police retirement age of 56 as basis.
The retirement age of 56 years old, covering all government and private employees regardless of position, designation or status, will provide early benefits to workers, the bill’s authors argued, since at 56 those covered will now qualify as senior citizens and enjoy VAT exemptions, mandatory membership in PhilHealth, and discounts for medicines, basic necessities and services. Lastly, early retirement will also make way for fresh blood in the public service.
Here’s the rub: Not all are financially prepared as the world marches toward late retirement. About 9 in 10, or 90 percent, of Filipino workers lie awake at night wondering how they can stretch their money when they retire, according to a Rappler report quoting a study by The Global Aging Institute and Pru Life UK. The lowest monthly retirement pension under the Social Security System (SSS) is P2,200, and P5,000 under the General Service Insurance System (GSIS). Many Filipinos are anxious about exhausting their savings and having no one to care for them, or being a burden on their children, when they retire, said the study.
According to another study, 38 percent of both the active 12,193,170 registered members of SSS and of the 1,312,508 members of GSIS said they will still have a job after they retire, as against the global average of 17 percent.
Meanwhile, in the Organization for Economic Cooperation and Development, nine countries do not allow early retirement under any mandatory part of their pension system: Denmark, Hungary, Ireland, Israel, the Netherlands, New Zealand, Poland, Turkey and the United Kingdom. In other cases, early retirement is restricted to certain schemes—in Australia, Chile and Iceland, to mandatory private pensions. In Canada and Sweden, there is no early retirement under basic or targeted programs.
Why would you retire, really, at 56 when you are still at your peak? And why would the government prohibit you from working and saving more for retirement, not to mention contributing more to the SSS or GSIS to help them extend their life?
Retire at 56 — and suffer the opportunity cost.
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Arnel L. Cadeliña is the dean of the College of Business and Accountancy of Sacred Heart College-Lucena City, and is a graduate of Ateneo MBA.
