We highlighted that on average, defined contribution fund members could expect to retire on 39% of their final pensionable income. One solution for this is to increase the normal retirement age, but it is a solution that does not apply equally across all industries and all classes of workers.
For example, physically demanding work lends itself to earlier retirement, while jobs involving people skills or intellectual effort may lend themselves to later retirement. Because all of this links to productivity, we suggested de-linking the retirement age from the pension fund. How a company determines its retirement age is clearly a function of their recruitment needs and demand for skills.
We understand that most people don’t realise that South Africa has no mandatory retirement age. Companies and retirement funds determine these. This means that there has been no public policy decision in favour of older workers over younger, whether based on concerns about youth unemployment or any other justification. In South Africa, we need to acknowledge that skills shortages can have as crippling an impact on economic growth as unemployment.
Equally problematic is the additional state burden of providing for a ballooning population of retirees who are underfunded. Additionally, research on how the human brain ages highlights that the older brain often has a better capacity for strategic and visionary thinking; a greater capacity for the kind of empathetic insights that great leadership demands.