10 February 2010

Luncheon Talk:

¡§Retirement ¡V What Next?¡¨

Speech by Dr. C.H. Leong delivered on

10 February 2010

 Let me begin by thanking the organizers for the invitation to address this august gathering on the subject of ¡§retirement¡¨ ¡V a topic which I must admit that I have passion for a few reasons:

• „P I am myself a 70+ year old man

                    I have still not retired and do not intend to.

• „P Many of my friends are around my age group

                    Some have, retired, others not.

They have been telling me their side of the stories.

• „P Since taking up the chairmanship of the Elderly Commission, I have been approach by many social service groups, urging the needs for a Comprehensive Old Age Retirement Fund for all elderies, giving me an impression that ¡§financial issues¡¨ or ¡§money¡¨ is the ONLY thing that needs to be concerned after retirement.
  

      Let me relate to you a few of my personal encounters.

      Friends who have retired have told me that they are very happy. They can do all the things they want to do but have no time to do in the past because of lack of time ¡V read books, play golf, travel etc. Some even say they get the most satisfaction spending quality time with their grand children. Yet, how long can those ¡§satisfaction¡¨ last? For those who did last, a detail analysis of their lifestyles revealed that retirement meant only not involving with their usual, perhaps boring jobs. Many have taken up membership in advisory bodies, work in volunteer agencies and/or part time teaching in universities, so much so they would complain that they are busier than ever before. Are they then really retired?

       During my medical student days, many of the professors are from the U.K. In those days, they have to retire at 55 and on retirement, they have to return to their country of origin. In HK, as expatriat professors, they are on top of the world. They are well known and respected in every corners of the society. On return to UK, perhaps to a small town, they became nobody. They have no work, no responsibilities; often they feel useless and not involved. Many, I have witness, dwindle slow and dry up, develop chronic ill health, pass away in a short time. Depression from boredom takes the upper hand.

;        Imagine the situation of 4-5 close friends who use to have lunch together, 3-4 times a week. Invanable at 2:00pm, everybody will rise and rush back to the office. On the days after retirement, at a similar lunch setting everyone excuse themselves as they have work to do and you are left alone as if ¡§ignored by the whole society¡¨.

       A happily married couple of 20 old years complained to me that they quarrel much more after retirement. The wife complaints that the husband is still in his pajama at 11:00a.m., while in the past, he used to be smartly dress up going to work at 7:30a.m. The husband complaints that the wife¡¦s fried eggs are no where need the standouts of HK Club.

      While there is no official age of retirement in HK and civil servants have been pitched at 60 years old, yet, time will come when retirement is unavoidable.

• „P For health (physical/mental) reasonssuccessful ageing should includes:

• „P When you yourself are feeling, or made to feel, that you are upsetting the market force

               - You believe you are less efficient than before.

               - The next generation is thinking that you are hindering their progress.

               - When the employer hints that he should be getting better value for money by employing a young person

• Pros & Cons of Fixed Retirement Age

Let us analyse the pros and cons of imposing a fixed retirement age ¡V say 60 to 65. Remembering that the elders of today are very different from those of yesteryears ¡V they are usually healthier, better educated, still want to be involved and perhaps financially more independent.

• Positive Side of Age Imposed retirement

      What then are the positive sides of age imposed retirement. As a start, your juniors will be happy; they can look forward to a fix date to climb up their career ladders. Employers may feel happy too, for with less money, they could employ younger persons to fill your post, someone who may be more active, more efficient than you were. For those about to retire and have a significant pension, their intention maybe to retire as early as possible to ensure they could enjoy the benefits that pensions bring, as long as possible. After all, how long one can live after a specific retirement age is unpredictable.

What are some of the negative effects?

      I would like to look at it in 3 angles. Negative effects to the person, negative effect on the society and negative effect on the economy.

The negative effect on the person.

      In the beginning of this talk, I have already enumerated some of the adverse effects of retiring at a fixed age. Researchs have shown that continual work essentially equips older workers with a social status and an active life and thus a better quality of life. Furthermore by continual contributing to the society, the elderlies act as good role models for the young. Work demands a variety of physical and mental activities; it is thus a good exercise for keeping the body and mind going and is good for health, mentally and physically. The World Health Organization, therefore encourages continual work as part of its active ageing promotion for ¡§ compression of morbidity¡¨ to ensure that the period of old age illness and dying be made as short as possible. There is evidence too that older people who choose to work are happier than those who don¡¦t. They therefore forego all these benefits if asked to retire at 60 or 65.

Negative effect on the society.

      Firstly, it would require major efforts to keep those still very active retirees occupied. The Elderly Commission together with the Labour Welfare Bureau have promoted the establishment of an Elderly Academy where elders are given the opportunity to return to schools and universities to remain occupied, active and be in touch with the societal advancement. Today, we have some 100 primary and secondary schools involved. Some 8 tertiary institutions are also in the programme to give our elderlies a change to taste of university life. This scheme has worked well, over 10000 elderlis are given chances to have their life meaningfully occupied. Yet nothing can compare with allowing them to return to work.

      Yes, elderlies may be expensive to re-employ. Yet, retiring them is not only stripping them their desire to serve the community, but depriving the society their experience and expertise gain through years of their working life.

Negative Impact on Economy

 Perhaps the greatest impact is on economy of the society. In HK, in particular, we are ageing rapidly. The estimation is that by 2033, some 1 out of 4 will be 65 and above. It shows at least 1 in 4 will be retirees then. Coupled with this is the very low birth rate. That means a small working population of the future will have to support an ever enlarging number of retirees. The elderly dependency ratio will grow from 168 in 2006 to 425 in 2036. In short, the number of working-age adult for each person over 65 will drop from one to six to one to two by 2036. At the same time, as life expectancy is prolonged, the dependency years will be longer too. All this equates to the need for expanding public services, especially, health care services and long term care for elders, in the presence of decreasing government revenue because there will be less people paying tax.

      Even on a personal basis, economic consideration is a problem. Data from a survey by the HK Retirement Scheme Association have shown that the amount of assets many third ager have is not enough for their extended retirement life.

      Thus, unless there are changes to the current social protection and taxation system on labour participate pattern, and these changes are most unlikely, older persons (especially those 80+) may have no other choice, but to rely on government subsidies in the future ¡V a great burden to the economy indeed.

      Many developed countries have attempted to use even early retirement to ease unemployment during economic downturns (notably are France and USA). This has been proven to be a mistake, as it would result in a longer economic recession because of labour shortage when economy starts to pick up.

      The conclusion is obvious. Retirement imposed by age is not the best way. We must move into ¡§Flexible Retirement¡¨.

      Two questions becomes wanting:

          - How to bring this about?

          - What preparations do we need for retirement in general or flexible, and retirement in particular?

How do we bring Flexible Retirement into effect ¡V what model should we use?

      Moving from a fixed age retirement to flexible retirement age is just like walking on a tight rope. You have to balance on one hand, the benefits for the elderly who want to work, the benefits that having them in ¡§labour¡¨ force could bring to the society and its economy. On the other ¡V the disapproval of the up and coming younger generations and the scepticism of the employers.

      Many countries do in fact, have been practicing progressive retirement using different models. While no single model may suit HK perfectly. I believe that the following principles are paramount.

          - Flexible retirement and raising the retirement age should in no way be compulsory and mandatory. Indeed, it must be initiated and agreed by both the employers and the employees (collective bargaining).

          - The move should not be seen or in essence actually blocking the next generation to ascend the career ladder..

          - There must be no excessive significant financial loss/ commitment on the part of the employers.

          - The employees must be given the necessary respect and that their expertise and experience be put to best used.

      I believe that a retiree should move aside to assume an advisory role and accept that the up an coming generation will have to take on the leadership. Their job should be to nurture the young to maturity. Since most retirees by that age has no more financial baggage on their shoulders and some may already be drawing the benefit of pension, they could and should take a salary cut to decrease the burden of the employers. It will be a win-win situation for all stakeholders concerns.

      To succeed in these highly charged political era, HK must move with caution. Moving from active work to no work suddenly is a painful process for a retiree. Suddenly moving from an age related retirement to a flexible retirement concept is also painful for the society.

      It is important therefore that pilot schemes be initially adopted by agencies most ready and flexible to retirement. I believe that major private cooperations and sizeable NGO¡¦s should take this on board. It could benefit for example to the Hospital Authority as a means to counteract the shortage of nurses.

What preparation do we need for retirement in generally, and flexible retirement in particular?

      HK has not done well enough on education for retirement nor pre-retirement training. There should be formal and informal education on a continuous basis for all age about the impacts of an ageing population, the manpower shortage, the dependency ratio etc. People should be educated that taking care of the elder, especially when it comes to financial consideration is the responsibilities of one self, one¡¦s family and the government. The call for a comprehensive retirement scheme should be discussed, yet the public must be made to realize that in caring for the elderly, government should not be solely responsible.

      Taking about financial planning for retirement, I believe the insurance agencies should be more active in promoting new products and ideas in a transparent way to assist the about to retire. Reverse mortgage, which is practiced in many parts of the world, have not yet picked up in HK. It is by no means easy to sell the idea in HK where psychologically it may be difficult for an elderly to part with something they have saved up the whole life to pass onto the next generations and they have now is depart onto it at his death bed. Yet details and feasibilities must be explored.

      As mentioned earlier, retirement is much more than just finance, mental and psychological adaptation is also vital. There is definitely a scarcity of pre-retirement training, be it large corporations, SME or even the government to prepare their staffs. Nor are there schemes for organizations to ensure that their retired staffs still feel that they are members of the family.

      Similarly, there are insufficient facilities and ideas to keep our retirees active, in particular for the middle and lower social class. Yes, there are the elderly centres, yet few would enjoy sitting there, watching oldie movies and making plastic flowers.

      The Elderly Commission has started the Elderly Academy; other countries have Universities of the Third Age. We need more new innovations.

      Where does government come in? While it has always been my conviction and believe that caring for the elderlies is everybody¡¦s business, yet government could not and should not absolve from its responsibility in particular as a facilitator and in setting policy directions.

      As a start, many of the activities and actions of government departments somehow go counter to government¡¦s policy of elderly care. To wit whilst it is government basic policy to promote ageing in place and at home, yet you get a bigger tax deductions for supporting your parents living in an elderly institution than if they age at home. How paradoxic, take amount example, the Elderly Academy programme gets the full endorse from government, to the extent that government created an Elderly Academy Development Fund, yet not a single government school has so far enrolled into the programme.

      I believe there may be a lack of coordination between the different Departments and Bureaux. The only way to take Elderly issues effectively is to mainstream them into all policy domain and to ensure that ¡§ageing ¡§ is incorporate into, and properly coordinate with, different policies in HK, be it finance, health, housing and retirement. It needs more than an advisory body like the Elderly Commission to bring this about.

      Mr. Chairman, ladies, gentlemen, for the last 20 minutes as a so, I have been painting to you a picture on the pros and cons of retirement on a specific age. It is obvious for an old man of 70+ years and has not retired, my inclination is to support Flexible Retirement Age. Then, I have to declare my interest. We have shown the positive effect of extending working life on the persons, on the societies as whole. Yet to bring this about is much more then waving a magic wand. It needs a policy inclination from government and support from the employment sector of the community. Other than performing a difficult balancing act, there are practical areas to consider:

           - do employers get tax incentive from re-employing the retirees

           - there will be a need for appropriate change to current labour mandatory provident fund (MPF) practices, such as different types of employment arrangements, job sharing, minimum hours of employment etc.

Yes difficulties and obstacles abound. But if it is considered to be for future good, then my motto has already been: then don¡¦t ask the question ¡§why¡¨, but ask ¡§why not¡¨.

Thank you.