Retirement age

By Raul J. Palabrica
Philippine Daily Inquirer
First Posted 22:32:00 08/12/2010

AGE IS JUST a number, so goes an advertisement for a food supplement directed at senior citizens.
Try telling that to the flight attendants of Philippine Airlines who, under their collective bargaining agreement, have to retire when they reach 40. And be ready to get a severe tongue lashing.
The airline industry has varying retirement policies. Most American and European airlines send their pilots packing between ages 60 and 65. For PAL, it’s 60.

The cabin attendants of US airlines are better situated. Strict anti-age discrimination laws allow them to stay on as long as they are physically fit.

Not so for some Asian airlines. Age and physical appearance determine the stewardesses’ continued employment.

The female flight attendants of Thai Airways who are aged 45 and above are encouraged to sign a “mutual separation plan” that would give them generous separation benefits in exchange for calling it quits.

Singapore Airlines’ famous “Singapore girls” can wear their figure-hugging uniforms only up to age 35. By entering into five-year contracts, with one renewal only, management is able to skirt discrimination suits that may be filed by young retirees.

Mandatory

Retirement is a sensitive issue in both private and government sectors, especially in the executive or managerial levels.

Except for judicial and constitutional offices, the compulsory retirement age for government employees is 65. Barring any disciplinary action or requirement for special qualifications, a civil service employee can reasonably expect to be promoted within the ranks through attrition as those above him reach retirement age.

Retirement is a double-edged sword. A high retirement age could adversely affect the morale of talented staff members who aspire to climb the corporate ladder (and enjoy its accompanying perks) as soon as possible.

When vacancies in the executive offices are hard to come by due to the presence of “overstaying” officers, ambitious employees with marketable skills will not hesitate to seek their fortunes elsewhere.
But setting a low retirement age has its downside too. Expertise gained through long years of service is not easy to replicate. There is no assurance that the prospective successors, even if they hold prestigious academic degrees, can effectively fill up the void left by the retirees.
Finding a balance between these two concerns is a test of managerial leadership.

Planning

Adherence to age-specific rules on retirement is not a problem for companies with internal training programs that ensure the availability of staff who can take over in case of retirements or resignations.
This “estate planning” process begins the moment new employees get on board. Those who show leadership potentials are put on the fast track and given proper exposure and training to prepare them for bigger responsibilities.

They can quickly step into the shoes of the retirees. The adjustment period, if any, is often minimal.
The partners of one of the country’s leading auditing firms are obliged to retire upon reaching age 54 or 55, or roughly the equivalent of 20 years service, to allow the younger partners to assume leadership positions while at the peak of their professional productivity.

The presumption is, by that time, the retiree has saved enough money to be able to start a new business, or live in retirement comfort, or received a lucrative offer to work in a client company.
When the road to the executive floor is not littered with overstaying officers, those who occupy the lower floors are inspired to work harder as they await their turn to move up.

Benefits

The retirement age in the private sector is determined by the collective bargaining agreement between the employees and the company, or other applicable employment contract.

If the job is stressful or physically demanding and extended stay at work could be detrimental to the employee’s health, union and management can agree on a lower retirement age.

In PAL’s case, the argument has been raised that the strain caused by irregular working, sleeping and eating hours, including the adverse effects of atmospheric cabin pressure, justify the flight attendants’ early retirement.

For companies with no CBA, the retirement age is a matter of agreement between the individual employee and the employer.

Although the common practice is for employees to stay on until they reach 65, unless earlier dismissed for justifiable cause, there are employees who opt for early retirement so they can enjoy their retirement pay while still relatively young.

This holds true for jobs that require specialized intellectual or creative talent, e.g., software development and entertainment production, that command hefty compensation benefits.
As in all high paying jobs, the burnt-out feeling sets in much earlier when the brain and the nerves are placed under constant pressure in an effort to justify the fat paycheck.

If there is neither CBA nor employment contract, the Labor Code provides that an employee who reaches age 60 or more, but not more than 65, and has worked for at least five years, is entitled to a retirement pay equivalent to 15 days pay for every year of service.