Chapter 1 Introduction1

Dimensions of the evolution of retirement as a social institution
The underlying revolution in longevity
Changed perspective about retirement in our society
Bibliography

Dimensions of the evolution of retirement as a social institution

Experts on retirement seem to acknowledge with increasing frequency that the social institution we know as "retirement" is changing in important ways. Some say these changes are like a quiet revolution, a sort of profound transformation. They seem to have gathered steam in the era of Reagan and Thatcher, but they have been gaining momentum since then. We need to re-examine the traditional ideas if we are to realistically confront what retirement is becoming in the twenty-first century.

To set the stage for the discussion that unfolds under the four themes in this book, this chapter will briefly describe some of the ways in which the social institution of retirement has been changing since the Reagan-Thatcher era, and comments on how these changes have created, since the 1990s, some new horizons for research on retirement.

Three major dimensions in the relatively recent evolution of the social institution of retirement can be described as systemic (our social system maintained by various collective actions), organizational (specific institutions such as major corporations), and behavioral (families and individuals).

Evolution at the systemic level

Across OECD countries, an ageing population² and labor force has combined with a certain policy environment to create major financing pressures in connection with public retirement-income support and health-care systems. This policy environment was established for a different historical era-one in which it was good practice to assist in the massive and orderly exit of older workers from the labor force at a designated age to help with corporate renewal and to alleviate unemployment among youth. This policy environment helped to sustain a multi-decade decline in labor force participation among older persons. This decline, in combination with an ageing population, was first marked by fertility-rate reductions. However, in more recent decades with increased longevity in the senior years, it has prompted a systemic-level change in the form of concerted senior government policy initiatives.

Both OECD (2001) and the Canadian Policy Research Initiative (2004) have done a good job of summarizing the pressure toward such large-scale social engineering. OECD (2001:77) states:

In Canada, a project named "Population Aging and Life-Course Flexibility" was undertaken by the Policy Research Initiative (PRI) with support from the Social Science and Humanities Research Council of Canada. Its goal was:

A similar perspective is also found in the ILO's 1999 World Employment Report, and in declarations arising from the 2002 World Assembly on Aging, and the 2002 Inter-Ministerial Meeting on Aging held in Berlin.

Government initiatives in this area have focused on benefit streams controlled or regulated by government. OECD (2001) cites a number of these initiatives. Among them are partial pension schemes in Sweden, Finland, Germany and Japan. These allow for a reduction of working hours with a given employer, while simultaneously receiving partial payments from a pension scheme.

A network of broad-scale policy-environment changes is particularly evident in the case of the United States. These changes were summarized by Quinn in his presentation to the Symposium on New Issues in Retirement in 2003. In the United States, mandatory retirement has been abolished, and the age at which Social Security benefits can be received has been raised. Also, the government has removed disincentives to work that existed in the Social Security program, replacing them with a delayed retirement credit.

(See the chapter by Rein for related commentary).

In Europe, some countries have taken steps to close or greatly restrict access to certain alternate "pathways" to retirement based upon disability and unemployment benefits. OECD (2001) has an extensive review of the recent history of initiatives designed to reduce access to such pathways, and to simultaneously promote older workers' opportunities to be active in the labor market; albeit at reduced commitment of time to paid work on a weekly basis.

Evolution at the organizational level

At the organizational level, the evolution of the institution of retirement has many markers. They include:

• Downgrading the value of seniority, while finding new ways of retaining good employees without offering a retirement package in which the company undertakes a long-term liability for future payments to employees when they become retirees
• Moving away from defined-benefit pension plans while aiding in the stimulation of institutions for individual private savings for retirement
• Actively facilitating the spread of various kinds of non-standard work to give corporate leadership more flexibility in managing human resource inputs to corporate production
• Related dampened growth in the proportion of jobs available to those who wish to pursue conventional careers based in one organization.

Quinn has highlighted the importance of the shift away from defined benefit in pension plans as follows: "There has been a dramatic shift from defined benefit to defined contribution plans. . The defined contribution plans have eliminated many age-specific early-retirement incentives." (Quinn 2003) Increased use of defined contribution plans is also happening in Canada, but at a much slower pace (see Morisette and Zhang 2004, and Baldwin's chapter).

One effect of these changes is a major shift in the burden of effective planning for adequate retirement income from various public and private collective arrangements onto the shoulders of families and individuals. The chapters in this book by Baldwin, Castonguay, Li, Mo et al., Rein and Thacher, and Townson provide several perspectives.

Underlying these corporate-level changes is the notion that, increasingly, companies, even those said to be of "investment-grade", can no longer afford to make promises to employees that will be subject for delivery beyond the next five to ten years. Their own longevity cannot be assured for a longer period in the new climate of international competitiveness. Consequently, they are under pressure to redefine the unwritten social contract between an employer and new employees holding down indeterminate positions.

Taken to the level of the family and the individual, these ideas have enormous implications. For one thing, even the youngest of today's employees should no longer relax about long-term financial planning on the grounds that they will in due course find a good employer with a "nice" pension plan. Such employers are certainly among us, as are employees enjoying a "nice" employer-sponsored pension plan; but the probability of finding them in any random sample is steadily in decline, although at different speeds in different countries.

Evolution at the behavioral level

The foregoing review of developments at the systemic and organizational levels should lead you to expect a major evolution in the social institution of retirement at the level of the behavior of individuals and families. Perhaps the situation is best highlighted by the claim, made by a long-time preretirement services professional at the 2005 conference of the Canadian Association of Pre-Retirement Planners (CAPP), that more and more of his clients are rejecting the idea that retirement is a useful concept in their lives. They prefer to imagine a continuous process of transition in their life-course.

The objective macro-level reality associated with that thought is viewed in two ways. One is the systematic rise of older-population labor force participation rates across several OECD countries (highlighted in Guillemard's chapter). The second is reflected in the increasing proportion of workers whose transition to retirement involves multiple movements among different positions and roles in both the labor market and the nonprofit sector as formal volunteers.

Another key change at the behavioral level is a marked rise in the proportion of families where two spouses/partners have independent rights to a substantial pension income. As a result, retirement decision-making is increasingly a matter of trading off the separate economic interests of two or more people whose lives are intertwined (see Szinovacz's chapter). The 2002 Canadian General Social Survey found a high percentage of couples that reported that their retirement planning includes taking into account influences from their spouse's economic activity and related pension entitlements (see Schellenberg's chapter). All of this implies that the social science model is less relevant, which assumes a lone, most often male, retirement decision-maker acting to maximize a lifetime consumption utility under budget constraints. The growing relevance of family-level variables also has implications for corporate and public policy-making.

A related implication of women's major presence among the ranks of pension beneficiaries is the pressure on social scientists to take into account the special features of women's working-life courses when thinking about retirement. The very conception of what "retirement" means should now make room for productive unpaid work (see Stone 2003 for related discussion) because women's notions of retirement often include it, as McDonald's chapter elaborates. Moreover, the focus of retirement research on those who have had a conventional career job in one organization needs to be reconsidered, so as to give more attention to research on people with no such careers, but who nevertheless engage in some kind of retirement process.

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The underlying revolution in longevity

Related to the kinds of change summarized above is a profound demographic revolution that has several sources. This includes the steady increase in the average years remaining for those that reach age 65. A significant percentage of these people must now contemplate the prospect of being alive for at least another generation, unless we are all overwhelmed by natural or man-made catastrophes in the near future. This development poses a threat to those who are not able to obtain reasonable inflation protection for their incomes "going into retirement" (whatever that means to each person).

Even so, until one goes beyond age 85, these retirement years can often be years of quite good health. This poses a challenge, but also an opportunity in certain sense, for our collective deliberations and arrangements-how to make the best use of the enormous resource of human capital that these people in Peter Laslett's Third age represent (see Laslett 1989). Failure to respond well to this challenge poses a threat to the international competitiveness of those OECD countries that allow this resource to lie idle and largely unused.

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Changed perspective about retirement in our society

The foregoing sketch of broad-scale changes affecting the social institution of retirement points to the need to rethink traditional ideas about retirement in our society. New perspectives are needed. Some of these new perspectives are reflected in the chapters that follow. The chapters have been grouped into four broad themes: (1) systemic forces pushing toward a changed agenda for reforms of the institutional policies and practices pertaining to retirement, (2) family and gender as aspects of changes in theory and analytical perspectives concerning retirement-related behavior, (3) increasing diversity of transitions into retirement, (4) new vulnerable groups and living standards in the retirement years.

The co-editors have written a synopsis prefacing the discussion under each theme. They present key ideas that arise and also point out how the chapters elaborate aspects of these themes. The synopses include a detailed sketch of the organization of this book, and the reader is invited to consult them first (see the chapters by Paquet, McDonald, Gauthier and Asselin, and Townson), in order to gain insight into the overall structure of the book.

The original design of the book has been changed. There are now two volumes, in order to reduce th size of the product. The second volume contains all appendices and some bibliographies at expanded length. It is documentation of several innovations of concepts, data and methods, which serve as part of the foundation for the findings reported in this volume.

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Bibliography

International Labour Organisation (ILO). 1999. ILO Instruments. Switzerland.

Laslett, Peter. 1989. A Fresh Map of Life: The Emergence of the Third Age. London, UK. George Weidenfeld and Nicolson Limited.

Morisette, René and Xeulin Zhang. 2004. "Retirement plan awareness." Perspectives on Labour and Income. 5, 1, January: 11 to 18. Ottawa. Statistics Canada.

OECD 2001. Ageing and Income: Financial Resources and Retirement in Nine OECD Countries. 12, 1: 1 to 180.

Policy Research Initiative (PRI). 2004. Population Aging and Life-Course Flexibility: The Pivotal Role of Increased Choice in The Retirement Decision. Discussion Paper. Ottawa.

Quinn, J.F. 2003. Recent Changes in Labour Force Participation Rates at the Older Ages. Paper presented at the Symposium on New Issues in Retirement. Statistics Canada, Ottawa. 5 to 6 September.

Stone, L. O. 2003. "Déterminants des trajectoires de transition à la retraite de toutes sortes de travail-une analyse empirique préliminaire." In Ages, générations et contrat social. Jacques Véron, Sophie Pennec and Jacques Légaré (red's). Paris. INED.

United Nations (UN). 2002. Report on the Second World Assembly on Ageing. New York.

United Nations Economic Commission for Europe (UNECE). 2002. Berlin Ministerial Declaration: A Society for all Ages in the UNECE Region. Berlin. UNECE. 11 to 13 September.

Notes

1. Thanks are due to the peer reviewers for their contributions to imporoving earlier drafts of this chapter. The comments of Murray Gendell and all the co-editors of the book were especially helpful. All opinions and errors herein are mine.
2. Here "ageing population" means increases in the percentage of older persons in the total population.