Earlier this month the
Omanhene of the New Juaben Traditional area, Daasebre Oti Boateng suggested at
his 75th birthday celebration that Ghana's pension age should be
increased from 60 to 65 years.
Daasebre's reason for advocating the increase is that there are many experts and professionals with valuable skills and experience who are strong and can continue to work longer and share their experiences with the young generation. Ghana continues to lose expertise in critical sectors of the economy because they must necessarily retire at a certain age, Daasebre laments.
Currently Ghana has 2 public pension schemes: the main one administered by SSNIT and a second called Cap 30 (due to be phased out by December 2013) and other private schemes.
Daasebre Oti Boateng is not alone in making this call. In May 2010, Joseph Amenowode then Volta Regional minister also called for the pension to be increased to 65 when he realised an energetic headmistress of a secondary school had to go on compulsory retirement although she loved her job and was desirous of continuing.
Why Should Pension Age Be Increased?
Daasebre and others say that more older employees have acquired a lot of useful experience that are still needed and can be passed down to younger employees. They also believe that the skills and experience of older professionals help an organisation to stay competitive.
Some also advise that Ghana as a developing does not have many professionals in certain critical sectors. These sectors include teachers, university lecturers and researchers, health professionals, engineers and so on. So instead of asking an experienced electrical engineer or surgeon with over 30 years experience to retire, allowing them to stay on for a further 5 years will not hurt and can only benefit the country.
This line of thinking is supported by the fact that the Life Expectancy (the average number of years a person can expect to live up to) in Ghana has increased. In 1980 the Life Expectancy (LE) in the country was 51 for men and 53 for women. As at 2012 the LE is now 62 for men and 64 for women. So the average LE has gone up by 11 years. That is the average Ghanaian now lives longer by 11 years. This means that if the pension age is static pension payments will become expensive for SSNIT as retirees will live longer years and claim pension for more years.
Another reason advanced by those asking for increase in pension age is that some older people enjoy their jobs and want to stay active by continuing to work. The changing nature of work means that a lot of jobs are now less physically strenuous so many people are still strong and energetic when approaching retirement.
Some firms have difficulty retaining younger talent so keeping older workers for long is good for those organisations.
Daasebre's reason for advocating the increase is that there are many experts and professionals with valuable skills and experience who are strong and can continue to work longer and share their experiences with the young generation. Ghana continues to lose expertise in critical sectors of the economy because they must necessarily retire at a certain age, Daasebre laments.
Currently Ghana has 2 public pension schemes: the main one administered by SSNIT and a second called Cap 30 (due to be phased out by December 2013) and other private schemes.
Daasebre Oti Boateng is not alone in making this call. In May 2010, Joseph Amenowode then Volta Regional minister also called for the pension to be increased to 65 when he realised an energetic headmistress of a secondary school had to go on compulsory retirement although she loved her job and was desirous of continuing.
Why Should Pension Age Be Increased?
Daasebre and others say that more older employees have acquired a lot of useful experience that are still needed and can be passed down to younger employees. They also believe that the skills and experience of older professionals help an organisation to stay competitive.
Some also advise that Ghana as a developing does not have many professionals in certain critical sectors. These sectors include teachers, university lecturers and researchers, health professionals, engineers and so on. So instead of asking an experienced electrical engineer or surgeon with over 30 years experience to retire, allowing them to stay on for a further 5 years will not hurt and can only benefit the country.
This line of thinking is supported by the fact that the Life Expectancy (the average number of years a person can expect to live up to) in Ghana has increased. In 1980 the Life Expectancy (LE) in the country was 51 for men and 53 for women. As at 2012 the LE is now 62 for men and 64 for women. So the average LE has gone up by 11 years. That is the average Ghanaian now lives longer by 11 years. This means that if the pension age is static pension payments will become expensive for SSNIT as retirees will live longer years and claim pension for more years.
Another reason advanced by those asking for increase in pension age is that some older people enjoy their jobs and want to stay active by continuing to work. The changing nature of work means that a lot of jobs are now less physically strenuous so many people are still strong and energetic when approaching retirement.
Some firms have difficulty retaining younger talent so keeping older workers for long is good for those organisations.
Reasons Against Increasing Retirement Age?
Many other people especially the young generation oppose increasing the pension age for many reasons. In Ghana and Africa young people make up majority of their populations.
In many of these African countries including Ghana, the government is the largest employer. Every year many young people are employed to work in the public and civil service. So increasing the pension age from 60 to 65 will limit the prospect of many younger people to be employed. In addition youth umemployment in Ghana and many other Africsn countries is about 20% or more. This high unemployment rate breeds social problems like unrest, crime and other social vices so a rise in retirement age will just compound this unemployment problem.
The argument is also made that young people bring fresh ideas and new thinking to the workplace so instead of increasing the pension age, more younger persons must rather be hired to bring innovation and vibrancy to the workplace.
Another point is that many people in employment now (especially in public sector) actually reduced their official ages before entering employment. They did so to delay their retirement so that they could draw salaries for longer. In short they are working with 'reduced' or 'football' ages so allowing them to hang onto their jobs will delay the entry of youths into the workforce.
The last but equally important point is that many young people constantly complain about is that when the join the workforce, they encounter a lot of experienced and older staff who see younger staff as a threat to their positions. If the younger staff are more qualified or show more potential than them, the older staff put impediments in their way and refuse to share their experiences with the young ones. This attitude is meant to frustrate and demoralise the younger staff. So if there are older and more experienced staff with this attitude and mindset at the workplace, giving them more years to hang onto their jobs will hinder productivity and stifle the careers of younger staff.
Pension Age Situation Worldwide
It will be more enriching to examine the pension age debate in other countries. Next door in Nigeria, the Federal Government last year increased the retirement age of university professors from 65 to 70. In announcing the increase, Federal education minister said the move is to "encourage more people to go into lecturing and to aspire to the peak of their careers". In Nigeria again in October last year the government announced it was considering increasing the retirement age of junior and secondary school teachers from 60 to 65.
In South Africa the ANC government last year also said it was considering raising the pension age of university professors from 60 to 80. The reason being that the country desperately needed to train more young people as many youths were not interested in academia. They rather preferred to work in the private sector.
So in both Nigeria and South Africa, there was an increase (or consideration to do so) in a specific sector only-education. It was not across board in all sectors.
Over in Europe the scenario is quite different. Life expectancy in many European countries has shot up due to better health care and healthy lifestyles. Research data shows that LE at birth in OECD countries is expected to increase by 7 years in the next 50 years.
A high LE has allowed many countries to raise the age at which citizen's retire. The government normally is the main payer of pensions and because many people now live longer, pension payments have become very expensive and led to government borrowing and public deficits.
In the United Kingdom (UK) men currently retire at 65 and women at 60. But the government has agreed to raise it to 66 for both gender in 2018-2020 and it shall be progressively reviewed every 5 years in tandem with life expectancy. Significantly though the UK law las made retiring at the legal age to be VOLUNTARY. Meaning it is no longer compulsory to go on pension when your age is due. This flexibility allows older workers to stay on and work longer if the employer agrees. However the law also allows the employer to force an employee to retire even if that employee voluntarily decides to stay on. In this case the employer needs to prove that it has good public interest reasons for forcing that worker to retire.
With a UK life expectancy of 86 for men and 89 for women it means that if a citizen retires at say 65, that person can expect to live almost a third of their lives on pension and welfare benefits. But making retirement voluntary and increasing it to 66 shall save the UK government £60 billion in benefits and £8.1 billion in tax and National Insurance, according to the Office of National Statistics.
In France the pension age was increased from 60 to 62 in 2010 for both gender in order to pension costs. In Spain in 2011 the retirement age was increased from 65 to 67 to cut public spending. Similarly in Poland the government increased the retiring age from 65 to 67 for men and from 60 to 62 for women to reduce public spending and due to higher LE.
From the foregoing, it shows in Europe the trend is to increase the pension age upwards in response to high LE and to reduce public debt. Whereas in the African countries of Nigeria and South Africa, the pension age was increased for higher education workers only.
I believe Ghana's pension age must be increased just as Daasebre Oti Boateng suggests. However ti should not be increased across board for all sectors like is done in Europe. It must be for only critical sectors where skills are in short such as education, health, engineering, science and technology and agriculture. "Africa has the lowest share of engineering graduates in the world", according to the IMF. So why would the few engineers be forced to retire at 60 when we do not already have enough and they are still active?
What Ghanaian and African governments can do to help the situation of yet-to-retire workers is to give them pre-retirement training so they can gain new skills to make transition into retirement easier. Other experienced people could also be engaged on contract basis or enlisted on to a 'reserve skills bank' to be called upon by both public and private sectors when needed. Lastly pension payments should be increased and also paid on time so that older workers will be motivated to retire.
Many other people especially the young generation oppose increasing the pension age for many reasons. In Ghana and Africa young people make up majority of their populations.
In many of these African countries including Ghana, the government is the largest employer. Every year many young people are employed to work in the public and civil service. So increasing the pension age from 60 to 65 will limit the prospect of many younger people to be employed. In addition youth umemployment in Ghana and many other Africsn countries is about 20% or more. This high unemployment rate breeds social problems like unrest, crime and other social vices so a rise in retirement age will just compound this unemployment problem.
The argument is also made that young people bring fresh ideas and new thinking to the workplace so instead of increasing the pension age, more younger persons must rather be hired to bring innovation and vibrancy to the workplace.
Another point is that many people in employment now (especially in public sector) actually reduced their official ages before entering employment. They did so to delay their retirement so that they could draw salaries for longer. In short they are working with 'reduced' or 'football' ages so allowing them to hang onto their jobs will delay the entry of youths into the workforce.
The last but equally important point is that many young people constantly complain about is that when the join the workforce, they encounter a lot of experienced and older staff who see younger staff as a threat to their positions. If the younger staff are more qualified or show more potential than them, the older staff put impediments in their way and refuse to share their experiences with the young ones. This attitude is meant to frustrate and demoralise the younger staff. So if there are older and more experienced staff with this attitude and mindset at the workplace, giving them more years to hang onto their jobs will hinder productivity and stifle the careers of younger staff.
Pension Age Situation Worldwide
It will be more enriching to examine the pension age debate in other countries. Next door in Nigeria, the Federal Government last year increased the retirement age of university professors from 65 to 70. In announcing the increase, Federal education minister said the move is to "encourage more people to go into lecturing and to aspire to the peak of their careers". In Nigeria again in October last year the government announced it was considering increasing the retirement age of junior and secondary school teachers from 60 to 65.
In South Africa the ANC government last year also said it was considering raising the pension age of university professors from 60 to 80. The reason being that the country desperately needed to train more young people as many youths were not interested in academia. They rather preferred to work in the private sector.
So in both Nigeria and South Africa, there was an increase (or consideration to do so) in a specific sector only-education. It was not across board in all sectors.
Over in Europe the scenario is quite different. Life expectancy in many European countries has shot up due to better health care and healthy lifestyles. Research data shows that LE at birth in OECD countries is expected to increase by 7 years in the next 50 years.
A high LE has allowed many countries to raise the age at which citizen's retire. The government normally is the main payer of pensions and because many people now live longer, pension payments have become very expensive and led to government borrowing and public deficits.
In the United Kingdom (UK) men currently retire at 65 and women at 60. But the government has agreed to raise it to 66 for both gender in 2018-2020 and it shall be progressively reviewed every 5 years in tandem with life expectancy. Significantly though the UK law las made retiring at the legal age to be VOLUNTARY. Meaning it is no longer compulsory to go on pension when your age is due. This flexibility allows older workers to stay on and work longer if the employer agrees. However the law also allows the employer to force an employee to retire even if that employee voluntarily decides to stay on. In this case the employer needs to prove that it has good public interest reasons for forcing that worker to retire.
With a UK life expectancy of 86 for men and 89 for women it means that if a citizen retires at say 65, that person can expect to live almost a third of their lives on pension and welfare benefits. But making retirement voluntary and increasing it to 66 shall save the UK government £60 billion in benefits and £8.1 billion in tax and National Insurance, according to the Office of National Statistics.
In France the pension age was increased from 60 to 62 in 2010 for both gender in order to pension costs. In Spain in 2011 the retirement age was increased from 65 to 67 to cut public spending. Similarly in Poland the government increased the retiring age from 65 to 67 for men and from 60 to 62 for women to reduce public spending and due to higher LE.
From the foregoing, it shows in Europe the trend is to increase the pension age upwards in response to high LE and to reduce public debt. Whereas in the African countries of Nigeria and South Africa, the pension age was increased for higher education workers only.
I believe Ghana's pension age must be increased just as Daasebre Oti Boateng suggests. However ti should not be increased across board for all sectors like is done in Europe. It must be for only critical sectors where skills are in short such as education, health, engineering, science and technology and agriculture. "Africa has the lowest share of engineering graduates in the world", according to the IMF. So why would the few engineers be forced to retire at 60 when we do not already have enough and they are still active?
What Ghanaian and African governments can do to help the situation of yet-to-retire workers is to give them pre-retirement training so they can gain new skills to make transition into retirement easier. Other experienced people could also be engaged on contract basis or enlisted on to a 'reserve skills bank' to be called upon by both public and private sectors when needed. Lastly pension payments should be increased and also paid on time so that older workers will be motivated to retire.
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