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Sent: 05-05-2009 10:20:02
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The Revolution in SalariesEmail Marketing Business Opportunity - Helen BairstowThe Silver Lining of the Economic Downturn - Part 1The Easiest way to do a Client NewsletterEmail newsletter redesigned for mobile devicesExcess Contribution Assessments & EU retirement finances
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The Silver Lining of the Economic Downturn - Part 1

Click here to buy - A How To Book of SMSF's by Tony Negline
Lester Wills

Retirement has gradually become a hot issue around the world. Those who have read my missives will know that I am not believer in fixed retirement ages, particularly what I regard as the irrelevant age 65 idea. Using that as a fixed retirement age was fine when the average life expectancy was 60 (or below) and people were often ill or infirm by the time they reached that age. That is not quite the situation today.

However, changing attitudes is something else. I get research material from a plethora of organizations, including AARP. This was formally known as the American Association of Retired Persons, a United States-based non-governmental organization and interest group. AARP operates as a non-profit advocate for its members with more than 35 million members making it one of the largest membership organizations for people age 50 and over in the United States and as a result is one of the most powerful lobbying groups in the United States.

In January this year, AARP and Council for Third Age gathered more than 400 opinion leaders from 16 countries for the Reinventing Retirement Asia conference in Singapore. Experts explored approaches to reengineering the workplace, re-careering older workers, recasting public perceptions of aging, and restructuring the regulatory environment for employment of older persons, pension plans and social insurance schemes.

As was noted at the conference, according to the latest projections by the United Nations Population Division, the number of people worldwide age 60 and older is expected to triple by 2050. Whilst this demographic shift will provide significant opportunities to capitalize on the talents and skills of older persons (about time, but being a boomer I am biased), it will also challenge governments to maintain the financial security of their populations.

The executive summary of the report from the conference noted that while population ageing may be a nearly universal phenomenon, countries are at varying stages in the process. Japan for example already has a top-heavy population structure and is concerned with providing income security for its older citizens. China's population structure resembles a cube, so the goal is to maximize the value of its large, but soon-to-be-shrinking, workforce. India on the other hand has a young population so the current challenge is providing enough jobs and housing.

Despite this, it is indisputable that all of these countries must prepare for a larger proportion of their population to be 'older' and that this segment will live longer than previous generations.

Then of course we have the current economic situation which according to the AARB is having a disproportionate impact on older adults. As they point out, competition for jobs and resources is intensifying at a time when many older adults have lost significant portions of their retirement assets.

However, there does appear to be a silver lining in all this. The current economic conditions are forcing countries to (finally) rethink outdated retirement systems. Among highlighted best policies in this area is a feature of Singapore's mandatory savings scheme that provided stability to its population despite the downturn. The scheme requires contributions be invested chiefly in government-backed securities with guaranteed returns. In addition, the country has recently introduced the National Lifelong Income Scheme, which requires partial annuitisation of pension schemes to ensure that people do not outlive their savings.

During the opening session it was argued there is a need to embrace an ageing population through adjustments in policy and the workplace environment, and a conscious change in social attitudes. This changing of perceptions about retirement, employment and ageing requires a sustained, concerted effort from all stakeholders, be it governments, businesses, labor, NGOs, the media or individuals, they all have a role to play.

I must admit this is music to my ears as it is something I have been ranting about for a long time. Whilst each country must come to its own solutions reflecting its culture, demographics and stage of development, a number of common themes will invariably apply.

Without doubt, the artificial distinction between "work" and "retirement" must be removed. As was noted at the conference, many will live an additional 30 years after they reach traditional retirement age, i.e. 65. According to AARP, one emerging trend is the notion of an "encore career" that balances income with social impact. India's Dignity Foundation, for example, has created an online portal to link older adults with paid work opportunities, as well as volunteer positions at NGOs. It also provides training in computer skills and interview etiquette. It seems that similar initiatives are taking place in other countries.

I will expand upon these next time.

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