I’ve read an article from Bloomberg, on the possibility of retirement age as high as 80 years old!!! The article is as follows:
American International Group Inc. (AIG) Chief Executive Officer Robert Benmosche said Europe’s debt crisis shows governments worldwide must accept that people will have to work more years as life expectancies increase.
“Retirement ages will have to move to 70, 80 years old,” Benmosche, who turned 68 last week, said during a weekend interview at his seaside villa in Dubrovnik, Croatia. “That would make pensions, medical services more affordable. They will keep people working longer and will take that burden off of the youth.”
The crisis, now in its third year, threatens to destroy Europe’s 17-nation currency union as Greece contemplates exiting the euro and Spain sees its bond yields rise and banking industry falter. German Chancellor Angela Merkel hardened her opposition to joint debt sharing in the euro region as U.S. President Barack Obama singled out Europe’s leaders for not doing enough to arrest the crisis.
Greece abandoning the euro could be a disaster for the country and Europe must work to keep that from happening, said Benmosche, whose company was the world’s biggest insurer before it took a U.S. bailout.
“People in Greece have to see there is no easy way out of this” and the government must get them to work longer, he said in the June 2 interview on the Adriatic coast. “If not, and if they go to their own currency, I think they will see huge inflation and it will be devastating for people on fixed incomes.”
Greece, where the average life expectancy is 81.3 years, has an effective retirement age of 59.6, among the lowest in Europe, according to data compiled by Bloomberg. French President Francois Hollande, the Socialist who was sworn in last month, has pledged to cut the retirement age to 60 from 62 while increasing corporate and bank taxes and introducing a 75 percent levy on earnings of more than 1 million euros ($1.2 million).
Peter Hancock, CEO of AIG’s Chartis property-casualty unit, said last week the insurer has assigned staff from Argentina to advise their counterparts in Athens as the company prepares for a possible Greek exit from the euro, with the common currency at its lowest against the U.S. dollar since June 2010. Argentina defaulted on a record $95 billion of debt in 2001 and later abandoned a decade-long 1-to-1 peso peg to the greenback.
“We have gone through the crisis in Argentina and other countries over time, so we have experience,” Benmosche said.
The short-term nature of some of the company’s insurance contracts would minimize disruption if Greece stopped using the euro, he said.
“Our premiums would convert to the local currency, but if they do, so will our obligations,” he said. “We will deal with the rules at the time.”
Benmosche has sold non-U.S. life insurers, a consumer lender and other businesses to pay back its taxpayer rescue, which swelled to $182.3 billion as the U.S. extended more credit and lowered the interest charged. The Treasury Department has cut its stake to 61 percent from 92 percent through three share sales totaling about $17.6 billion. In the most recent two, AIG bought back a total of $5 billion in stock.
AIG still seeks to divest its plane-leasing unit and sell its remaining stake in Hong Kong-based insurer AIA Group Ltd.
“The overhang from the government’s ownership interest in AIG is in the process of going away,” Paul Newsome, an analyst at Sandler O’Neill & Partners LP, wrote in a May 30 research note. “AIG should have sufficient enough capital to facilitate the Treasury Department’s exit.”
Treasury raised $5.8 billion in the first offering in 2011, selling for $29 a share. At the same time, AIG sold 100 million shares for $2.9 billion to demonstrate access to the capital markets and satisfy a condition of its bailout. The insurer bought half of the $6 billion in stock the department divested at $29 apiece in March and $2 billion of a $5.75 billion offering that went for $30.50 a share in May. The government needs to average $28.72 to break even on its investment.
AIG slid 6.8 percent on June 1 to close the week at $27.21 after U.S. employers created the fewest jobs in a year and the nation’s jobless rate rose to 8.2 percent. Reports also showed manufacturing grew less than estimated in the U.S. and China, and contracted for a 10th month in the euro region.
Benmosche said people and businesses in the U.S. lack confidence and are hesitant to invest as financial regulation and tax policies remain unsettled.
“I am optimistic that we’ll continue to grow, and if we get past this period of uncertainty and gain confidence again in the U.S. economic system, that will help lead the world out of the situation we are in today,” he said.
To contact the editor responsible for this story: Dan Kraut at email@example.com
I know that this may not be in Malaysians best interest, as many would read this as only applicable for United States only. However, in the opening of the article has stated:
governments worldwide must accept that people will have to work more years
The opinion given above is based on crisis in Europe, in which not affecting directly to Malaysia. Is what being said by AIG chief a possible event to happen in Malaysia? So far, our retirement age is 56 years old. Will we need to work until 80 years old???
I certainly hope not. I am also certainly hope DS Idris Jala will not make this another false alarm to Malaysians, as what he had done before. Worse, what he has spoken being manipulated and gave bad impact towards any effort to improvise our economic condition.
Question on the street: Based on what is happening around you, at what age should be retirement age?