SECOND OPINION:A FAMOUS CARTOON, Dropping the Pilot, is among the most striking images of the 19th century. With pathos and biting insight, it portrays the myopia and ingratitude of Kaiser Wilhelm II in his dismissal of the 75-year-old Bismarck as chancellor of Germany.
Bismarck, the architect of German reunification, remained a consummate politician as well as an adept and radical social innovator in later life, the first to introduce health insurance, accident insurance and the old age pension.
I was reminded of this image by the early retirement of a wealth of senior staff from the Irish public service last month. While in some cases there may be very appropriate reasons for retiring early, the sum effect is to remove a major source of personal and institutional experience from the system. Not only does this run counter to an emerging research literature on the added value of older workers, but it also sits ill with preparation for a society where our citizens are living not only longer but also in better shape.
Case studies of management responses to the oil crisis in the 1970s are revealing: companies that let go older workers fared worse than companies that let go younger workers. The mature workers tend to have less short-term illness, and are adept at managing breakdowns and challenges in the system, having gained perspective and insight from long experience.
But in addition to dropping so many pilots literally, we are also metaphorically dropping the Bismarckian pilot through the undermining of pensions as an important form of intergenerational solidarity. The rot starts with a wrong-headed portrayal of his radical innovation as a cynical move, establishing the pension at age 70 when the average life expectancy in Germany was 45. In fact, average life expectancy was lowered by the huge infant and child mortality in the Wilhelmine era, and very significant numbers of older German men were awarded a pension: women did not receive a pension until much later.
The subversion continues with the depiction of older people as a financial burden, a phenomenon sometimes described as apocalyptic demography. Such calculations usually only consider public transfers of funding, and there is increasing evidence that when both private and public intergenerational transfers are considered (both during life and after death in the form of inheritance) the balance is not only equal, but that there is also what is called the longevity dividend, calculated at £40 billion (€48 billion) a year in the UK.
This is counter-intuitive to many, but older people provide huge supports to the economy and make major transfers to their children: the Tilda study showed that 24 per cent of older Irish people had made transfers of more than €5,000 to their children, but only 9 per cent had been in receipt of any transfer from their children. In addition, older people generate new markets and commercial opportunities.
The apocalyptic demography extends to portrayal of pensions as unaffordable, a position much promoted by the pensions industry and governments, and often casually echoed in the media. Since Bismarck’s time, pension provision has been a form of inter-generational support, perhaps cognisant of the wider range of transfers in both directions.
Alarming pressure is being placed on current generation to break this contract. The perceptive realise that a changeover from a social insurance model to a savings model involves a double payment: simultaneously having provided for our parents’ generation but also being hoodwinked into providing for our own future as well (and losing a very substantial portion of what we have saved to the rapacious commissions and charges of the pension industry, which takes as we pay in and also as we draw out).
The work of the TASC think tank in its excellent Choosing Your Future has clearly outlined a range of options that combine intergenerational solidarity and clear financial thinking. It should be essential reading for those who do not wish our future to be degraded by the pensions industry and the Government, akin to what the unholy alliance of property developers, banks and government did to our economy in the last decade.
The remarkable contributions of the arch-conservative Bismarck remind us that providing a secure income in old age is an issue that should rise above politics – it would be sad if we were to unwittingly confirm his dictum that what we learn from history is that no one learns from history.
Prof Des O’Neill is a consultant in geriatric and stroke medicine