Bola A. Akinterinwa
Retirement age is when statutory workers in any given stratum of society or country stop working and commence to enjoy superannuation and retirement benefits subject to conditions that vary from one country to the other. In some countries, the conditions are grudgingly accommodated. In some others, they are not. In fact, the conditions may be violently protested against, and by so doing, threatening global peace in their effect.
And true enough threats to international peace and security are increasing with the new dimensions of the crisis of retirement age in France. Put differently, wars do generate migrants, refugees and asylum seekers. Fantastic corruption, in the mania of Nigeria, breeds inequality and abject poverty. Disregard for the rule of law raises the issue of discrimination, lawlessness, and intolerance. These are still different from natural problems, like climate change and man-made policies that are, by design, conflicting. The crisis of retirement age in France is threatening national political stability and deepening European regional insecurity.
Without doubt, good retirement is a cardinal objective of civil, public, and private, sector servants, as it ends the hassles of a professional working life. It not only marks the beginning of a new and reduced active life, but also marks the enjoyment of state pension in eking out a better life. However, retirement is a major problem in international relations, especially in a plurilateral setting like the European Union and the ECOWAS.
In this case, the integrative character of governance in an association of States necessarily affects the tranquillity in other Member States. The common services of the regional grouping are always the first to be affected. For instance, one truth is that the more there are persons eligible to enter the retirement cadre, the more money is to be paid by the government. More often than not, the money is not always there. So when the government is not solvent enough to meet the financial burden, the first financial strategy it often embarks upon is to prolong the retirement year of workers. Workers hardly accept to work for additional years before embarking on their new private life. This is the genesis of the retirement age crisis in France and that of many other Member States of the European Union.
Tradition of Retirement Age
The origin of retirement age is traceable to the 18th century, but as an adopted government policy, to the late 19th century and the 20th century. German Chancellor Otto Von Bismarck, the ‘iron chancellor,’ was precisely identified to have invented the idea of retirement age in 1889 when he said that ‘those who are disabled from work by age and invalidity have a well-grounded claim to care from the State.’ In other words, 1889 was the genesis of state pension. Germany is on record to have adopted a national pension programme for the more than 70-year old persons. Later, the retirement year was cut down to 65 in consonance with the general time of payment of social security in many countries.
In terms of non-state pension, the United States is on record to be the originator. For example, the American Express Company started in 1875 to offer ‘the first employer-provided retirement plan… By the 1920s, several American industries, such as banking and railroad companies, started offering pensions to their employees. The federal government established a plan for its employees in 1920. The pension was offered under the Civil Service Retirement System (CSRS). The Civil Service Retirement Act became effective on August 1, 1920. The CSRS is a defined Benefit retirement system.’
On when to retire, there is little or no problem in quickly retiring officially and seeking to rest. However, at what time in one’s life should the retirement take place? Coryanne Hicks noted in her ‘How to Retire by 40 According to People Who Have Done It’ that ‘before the FIRE (Financial Independence, Retirement Early) movement invaded the US, there were iPhones, before there was even the internet (gasp), Billy and Akaisha Kaderli retired at the ripe ages of 38. Now entering their 33rd year of retirement, the Kaderlis have more money than ever.’ In any case, Coryanne Hicks says, ‘while early retirement may be easier today than in the ‘90s, it’s still not easy.’ It is against this background of uneasiness and when people should disengage from service that the on-going strike in France is interrogated and understood in its attendant implications.
In Germany, for example, the standard retirement age is 65 years and 7 months. While industrial groups and employer associations want the Government to prolong the retirement age up to seventy years, workers do not agree, hence the socio-political lull is yet to be meaningfully addressed. The projected retirement age by 2031 is 67 years and workers are already vehemently opposed to any increase. One can therefore begin to imagine the dynamics of the likely relationship between workers and Government in between now and 2031. The relationship has the potentiality of frostiness, especially that state pension benefits are payable only on attainment of 65 years of age. Whoever is aggrieved and wants to leave the service can always do so but his or her entitlements will not be paid until the attainment of 65 years of age. In the event of retirement before 65 years of age, payment of entitlements will be reduced.
What is particularly noteworthy about the situation of retirement age in Germany is that, the year 2023, in particular, is expected to witness the retirement from service of more people than people entering into the workforce. This simply means more payment by the German pension system. In fact, one expert has it that in the event there is no quick reform, pensions may account for about 44% of the state budget by 2040. But true, the Government wants to reform but there is a stiff opposition to it.
In Belgium, the pension system is of three types: state pension, occupational pension, and private pension. Pensions are generally paid to residents who are over 65 years. Like in Germany, the Belgian government wants to raise up the retirement age from 65 years in 2020 to 66 years in 2025, and to 67 years in 2030 for reasons of insolvency. The retirement age of 65 years is for persons leaving the service before 31st January 2025, 66 years for those retiring between 1st February 2025 and 31st January 2030, and 76 years for those retiring after 1st February, 2030.
To qualify for retirement benefits in Belgium, like what obtains in Nigeria, one must have worked for 35 years in full-time work or have attained 60 years of age. The critical point is that retirement can be on the basis of 60 years or 65 if a worker had spent 35 years in full-time work. Emphasis is on full-time work in this case. Payment of pension depends on the status of the worker. As of the end of year 2022, the average state pension in Belgium was €1,100 for employees, €2,600 for civil servants, and €900 for self-employed workers.
Greek workers can lay claim to full pension benefits if they have contributed, for at least 15 years (equivalent to 4,500 working days, to the pension plan. A worker can also retire at 62 and be paid full pension if they have contributed to the pension plan, for at least 40 years (12,000 working days). Thus, retirement is in itself a business. In the same vein, the Nordic Cooperation says the retirement age in Denmark is between 66 and 68 years and that retirement benefits are predicated on the number of years stayed in the country from the age of 15 to retirement age, or until one is awarded a disability pension or a senior pension. This also means that there are at least three types of pension in Denmark: length of stay pension, disability pension, and senior citizen pension.
Speaking lato sensu, Michael Buente, the Chief Executive of helpAge Deutschland, has it that ‘in most European Union countries, pensions systems as a whole now do more to reduce inequality than all other parts of the tax or benefit system combined… They can also contribute to reducing poverty by increasing the amount families have to spend. State pensions are affordable even in the poorest countries.’
And perhaps more interestingly but disturbingly, Professor Volker Deville, a demography expert with Allianz, also has it that ‘the fact that most people in the developed world can expect to receive a pension when they get older is a huge social policy success… However, one in two older people, mostly in developing nations, still have no pension income. For many, retirement is a luxury they cannot afford.’ In this regard, how do we explain the fact that, every time, in every given issue, there are always pointers to a better future for people in the First World, but the pointers for the people in the Third World are always different? Why is about 50% of black Africa not having access to retirement benefits? These questions partly explain why the issue of retirement age should be of a special concern to Nigeria, being the world capital of the black people of the world and self-appointed defender of African interest international politics. Nigeria should learn from the current French experience.
French Experience and Lessons for Nigeria
In a situation of order and counter-order, the immediate outcome is generally an encounter and the ultimate outcome cannot but be disorder. This is why the retirement age crisis in France is of concern in international relations as many countries, particularly Francophone Africa, have special and privileged ties with France. In different ways, Nigeria’s relationship with France is as strategic like France’s relationship with Nigeria’s immediate Francophone neighbours.
First on Nigerian experience, workers hardly protest against retirement age in the public or private outfits. The conditions of retirement and payment of pensions in Nigeria are not as complex as they are in other climes. In 1961, the National Provident Fund (NPF) was established as the first formal pension scheme for the non-pensionable private sector employees. In 1979, the first Pension Reform Act 102 was introduced. From the foundational constitutional provisions, four major dynamics of retirement in Nigeria can be delineated: public interest, compulsory retirement, voluntary resignation, and termination of appointment. Retirement in public interest, which necessarily implies non-usefulness of a worker, is well defined in sub-Section 030601 of Section 6 on Retirement in Public Interest.
As provided in this section, if the Public Service Commission is satisfied that ‘it is desirable in the public interest to do so, it shall retire the officer and the officer’s service shall accordingly terminate on such date as the Commission may specify. In every such case, the question of pension and gratuity will be dealt with under the Pensions Reform Act, 2004.’
Compulsory retirement is provide for under sub-Section 020810(i) which stipulates that the ‘compulsory retirement age for all grades in the Service shall be 60 years or 35 years of pensionable service whichever is earlier.’ It is useful to note that spending 35 years in the service is not really the issue but the requirement that such years must be pensionable. More important, sub-Sections (ii) and (iii) make further clarifications that ‘no officer shall be allowed to remain in office after attaining the retirement age of 60 years or 35 years of pensionable service whichever is earlier.’ These provisions are, however, not prejudicial to ‘Judicial officers and Academic Staff of Universities who retire at 70 and 65 years respectively.’
And perhaps more significantly, sub-Section (iv) says that ‘provided the officer would not have attained the retirement age of 60 years or spent 35 years of pensionable service whichever is earlier, a Director shall compulsorily retire upon serving eight years on the post.’ Unlike compulsory retirement, voluntary retirement is the direct opposite of compulsory retirement. Voluntary retirement can be for different reasons. It is generally expressed by resignation or absconding, in which case the officer may not be eligible for pension.
Grosso modo, when gleaned from the prisms of Nigerian civil and public servants. Many are the public servants who were born when there were no birth registries. They therefore declare on oath their self-determined age. As they grow older and are not yet ready for official retirement, they swear a fresh affidavit, declaring a new age that makes them younger than ever before. Whereas, when the argument of non-availability of birth registration centres is raised, it is an effort to deny old age. But when sworn-affidavits speak to the contrary, living longer now means reduction in years already lived. Foreign policy wise, Nigerian workers do not want to retire early. They want, if allowed, to die in office like many African leaders, elected or selected. On the contrary workers want early retirement in Europe, and particularly in France, because of the good, functional social security system. ‘8-hour work is really an 8-hour work’ not the way it is in Nigeria. Hence, the French people want to quickly retire and rest.
Secondly on France, the initial retirement age in France to qualify for full retirement benefits was 65 years as provided in the original Social Security Act of 1935. Minimum age was increased to an average of 68.7 years because of improvement in the healthcare system and increases in average life expectancy. However, in the 1980s, the mean declined by 5.0 years, especially for women (68.0 to 63.4).
What the issue is all about in France is that on 10th January, 2023, the French Prime Minister, Elisabeth Borne, announced the plan to raise the minimum retirement age from 62 to 64 years. The Assemblée Nationale is already discussing the issue, but not less than 68% of the French people are against the increase. The Economist (London) has it that, 64 years of age is moderate, when compared to 66 years in the Great Britain and 67 years in Germany. As told by The Economist, ‘most Europeans are much older than 62 when they begin to receive state-pension pay-outs.’
And true enough, the foundations of the French pension system were laid in the post-World War II. According to Didier Blanchet, in his “Pensions in France: A Look back at 30 Years of Debate and Reform, (vide Population and Societies, Vol. 574, Issue 2, 2020, pp. 1-4), in 1959, when France was much less affluent than it is today, expenditures on old-age and survivors benefits represented only 5.2% of the gross domestic product, the retirement age was 65, and the system guaranteed a far from comfortable living standard for pensioners. By 1970, their standard of living represented only 70% of the standard of living of people of working ages. The system acquired its current dimensions throughout the 1970s and the early 1980s, with the adoption of more generous rules for the basic regimes and the extension of coverage by the complementary regimes.’
Indeed, there are two pension ages, says The Economist, ‘a legal minimum of 62 years, at which a full pension is paid if the required number of contributions has been made, and 67 years, at which point a full pension is paid regardless. The new rules would accelerate the increase in the required number of annual contributions from 41 to 43.’ Without jot of doubt, France’s retirement age is among the lowest in the world. President Macron promised in 2017 after his election to review the minimum age for retirement, but the plan has not been quite popular.
In 2019, the Macron administration proposed a points-based system that was to enable a worker to retire on the attainment of a certain number of points. This was met with a ‘grève’ unprecedented that was considered the longest demonstration in France’s history. Government was compelled to drop the idea, probably also because of the impact of the ravaging COVID-19 by then, and also probably because not less than one million people took part in the demonstration which spread across major cities in France. Again, another major concrete opposition to President Macron’s retirement age plan took place in January 2023 when more than 80,000 protesters occupied the Place de la République, thus grounding train and other public services. They held placards with messages that ‘don’t touch my retirement.’ In the eyes of the protesters, President Macron’s plan was nothing more than a ‘historic regression.’
The Time reported that ‘on Thursday, March 16, French Prime Minister Elisabeth Borne, announced that the cabinet had invoked Article 49.3 of the French constitution to push through pension reform without a parliamentary vote.’ In the words of Elisabeth Borne herself, ‘we cannot bet on the future of our pensions and this reform is necessary’ (vide BBC reports). This is political governance by manu militari with very serious economic consequences. The likelihood of the protesters going back on their strike is remote in spite of the application or Article 49.3 of the constitution. Consequently, Professor Volker Deville, a demography expert with Allianz, has it that ‘the fact that most people in the developed world can expect to receive a pension when they get older is a huge social policy success… However, one in two older people, mostly in developing nations, still have no pension income. For many, retirement is a luxury they cannot afford.’ Nigeria should learn lessons from this and from other three main dynamics of crisis of retirement age: government’s financial insolvency to shoulder the burden of an increasing number of pensioners when the new number of entrants into the workforce is on the decline; Secondly, the point by a political scientist with bias for labour questions, Professor Andreas Bieler of the University of Nottingham, that ‘in France, those who are currently working pay into the fund that those in retirement are paid from; and thirdly, ‘because there is a change in population and there are more older people in retirement and fewer younger workers who actually pay, thus raising concerns about sustainability.’ This situational reality of problems generated internationally by retirement age is not much different from what obtains in Nigeria. President Macron wants to generate additional 17.7 billion euros in annual pension contributions but workers want alternative ways of increasing government’s needed funds: taxing the ultra-rich and increasing employer payroll contributions.A stitch in time saves nine.
