Retirement system needs shake-up

THE traditional concept of retirement will soon become obsolete as the British economy struggles to cope with an ageing population, according to a report from banking giant HSBC.

UK businesses will need to scrap mandatory retirement age limits and allow people to work beyond 65 as the ageing population forces a cultural shift.

A worldwide survey of over 11,000 adults by HSBC found that 80% wanted businesses to scrap the mandatory retirement age, with three-quarters claiming that they want to continue working in some form past the age of 65. Less than a quarter of respondents said that an ideal retirement would involve never working again.

Within 10 years the baby boom' generation of the 1950's will be entering into retirement, placing a huge strain on the Government's finances and creating a brain drain from the economy.

HSBC group chairman Sir John Bond said: 'The ageing of the 'baby boomer' generation, declining fertility rates and increasing lifespans are combining to create new and complex demographic pressures across the globe.

'The resulting changes will in many cases be positive but they also create real challenges, not least with regard to the funding of pensions.'

Life expectancy in the UK has risen to 77.2 from 69.2 in 1950 and is expected to reach 90 by 2050. Research author Dr Ken Dychtwald claimed that two-thirds of all people who have lived over 65 are alive today.

He said the baby boom generation has drastically altered the global demorgraphic, leading to rising numbers of over 65-year-olds.

Dychtwald said: 'Twenty years entitlement to retirement was a perk of the 20th century. To allow people to live in idle retirement in future will be difficult if not impossible.'

Sir John added: 'People are not simply expecting to work longer, now they want to mix work and leisure, learning and rest. It is critical that governments, regulators, corporations and financial institutions understand these emerging trends in behaviour and attitude if we are to successfully tackle the pressing issues before us.'

Earlier this week, new Work and Pensions Secretary David Blunkett hinted that pension saving may become compulsory to address the huge pensions deficit.

Former CBI boss Adair Turner is due to unveil his report into how the shortfall should be plugged before the end of the year.