October 21, 2020

The Editor Speaks: Retirement age to be raised to 65?

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Colin WilsonPremier Hon. Alden McLaughlin and Deputy Governor Hon. Franz Manderson held a press briefing last Monday (13) and announced they are considering raising the retirement age of civil servants to 65. At present it is 60.

It is not certain when this change will be made and McLaughlin took great pains to explain that government is seeking a ‘business case’ study on what the change will mean before it is being implemented.

This applies to all the other ‘Project Future’ rationalisations planned from the EY report.

“There is always great clamor for immediate change … Often these changes do not happen as quickly as we’d like, but we have to make sure we do these things properly,” the Premier said.

See iNews Cayman story published April 14 2015 “Cayman Islands premier outlines civil service changes likening EY Report as a ’toolkit’” at: https://www.ieyenews.com/wordpress/cayman-islands-premier-outlines-civil-service-changes-likening-ey-report-as-a-toolkit/

Ironically raising the retirement rate will automatically affect jobs despite McLaughlin’s claim the ultimate goal of the reform was not “job losses.” For five years those jobs held by the 60-65 year olds will not be available anymore. They are in fact lost to newcomers.

People are healthier, better educated, have less physically demanding jobs, and can work longer. They are also living much longer. So keeping benefits unchanged results in ever increasing costs.

But constantly reducing benefit levels by increasing the full retirement age is very hard on low-income, vulnerable people who cannot change their retirement date. If we want to cut benefits, it makes much more sense to directly change the benefit formula. Such an approach allows for larger cuts for the higher-paid than for those at the bottom of the earnings distribution.

In fact LOWERING the retirement age actually CREATES jobs.

Investing in our people to increase our prosperity should be the highest priority.

American and respected economist James K Galbraith, when asked the question should the minimum wage be raised said, “I would not do it permanently. It will be more effective as a strategy if you make the option more attractive for a brief window — say three years. You could then lure quite a few people who are ready to quit out of the workforce, open up jobs, and at the same time leave people who want to continue working alone.” [SOURCE: http://billmoyers.com/2013/11/11/dont-cut-lower-the-retirement-age-and-open-up-more-jobs/]

Now there is some sound advice. I hope the premier is reading this.

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