An article written by Carlos González Isla for La Tercera de Chile provides insight on a study developed by the UC Centre of Public Policies on elderly adults in Chile. On these regards, the AFP association claims that incentives must be implemented for those who remain in the labour market.

In Gondomar, Portugal, there is a university for people older than 50 years old with professors the same age. The institutions offers 52 degrees and, among other goals, it seeks to foster research in old age issues. This is one of the global projects mentioned in the study Elderly Adults: an asset for Chile, developed by the UC Centre of Public Policies with the collaboration of the AFP Association in Chile.

The research analyses the employment situation of the population over 65 years old, which includes 2 million people in Chile, and that it’s expected to reach 4.6 million by 2050.

The study shows that, according to OECD, the effective average retiring age in Chile (the age at which people actually stop working) is 70.9 among men and 70.3 among women. Both are above the legal retirement age, which is 65 and 60 years old respectively.

The retirement age in Chile is above the OECD average, which is 64.6 among men and 63.1 among women. In countries such as France, the phenomenon is the exact opposite, as the actual retirement age is lower than the legal retirement age. Cristóbal Tello, deputy director of Projects of the UC Centre of Public Policies, explains that in certain European countries, the economic level enables people to retire early, and they also have incentives to stop working and start pursuing other activities.

“In the case of Chile, the economic reality forces most people to work beyond their retiring age”, explains the researcher.

Fernando Larraín, general manager of the Association AFP explains that OECD’s numbers do not necessarily mean that people delay their retirement age to 70 years old, as in Chile they usually dot it a year or two after the legal age. However, he points out that the longevity figures and the demographic change the country will experience, justify a technical change in the retirement age.

“When the retirement age was settled, back in the 80s, men and women used to live less than what they do today. That is a fact”, says Larraín. The study confirms that men who were old enough to retire in 2016, have a life expectancy of 85 years old, while women’s life expectancy is 90 years old.

“We believe that changes must be made, but they will take some time to be implemented, and in the meantime, we need to create incentives for those who can and want to remain longer in the labour market”, he suggests.

Around 65% of elderly people say the main reason to keep on working is economic need. In addition, 65% also said they would keep on working even if they didn’t have to.

“Work is not only a source of income, but also a mean of professional fulfilment. Therefore, it is important to look at work not only from an economic perspective, but also considering the contribution it can make to society” says Tello.

Nevertheless, elderly adults have an average income gap of -28.7% when compared to other working adults. There is also a gender gap, as elderly working women earn 46% less than men.

“The decrease of the average income among elderly adults is due to the fact that their employment opportunities are reduced, and the major source of work after 65 years old is self-employment. The labour market faces a challenge”, highlights Tello. In fact, only 38% of people over65 years old have a labour contract.

Larraín adds that this is one of the reasons that make saving for retirement pensions mandatory. “Naturally, a 65 or 70 years old person cannot generate the same level of income that he/she used to generate when he/she was 40 or 50 years old. That is the logic that explains why pension systems are mandatory in the entire world, regardless the kind of system you may have”, he says.

Source: La Tercera