Bottom Shekel / Lower Pension Age for Women? Bad Move

The Ministerial Committee for Legislation agreed this week to reexamine the decision to raise women's retirement age to 64, up from the current 62. Although it's true that they are just considering the matter and have not decided to reverse the decision, things are going in a clear direction. The women's organizations have been lobbying, and politicians like to be attentive to vocal minorities. Indications are that the women's groups will get their way.

If that happens, the women can pat themselves on the back for digging their own graves. Paradoxically, they are doing this because of their relative distance from them: They live longer than men, by two to three years on average. This is important for two reasons. Women who are 60 and over are generally healthier than men, can work more years than their male peers, and do better work, too.

Women also need to fund longer pensions for themselves, and therefore need more savings than their male counterparts. That should have meant that women would actually work more years than men.

In reality, however, it works the other way. Women in Israel retire at 62 and the whole controversy is over whether that should be raised to 64, while men retire at 67. Physiological and economic logic would require that women retire older.

Why isn't this happening? The women's organizations say it's a matter of female privilege. Women were conferred the legal right to retire first and it's the only field in which discrimination is in their favor, so they shouldn't give it up. There's also another explanation: male paternalism, which considers women inferior and weaker than men. This spurred the view that women can't work once they get older. It's harder for women than men, the accepted wisdom went.

The women's organizations say that really is true: Many women have to leave the workforce when they're older, and raising the retirement age will harm them. Not only won't they be working (because employers don't want to hire them and because they want to take leave of their exhausting professions ), but they won't get a pension.

This is a dreadful recipe for poverty among older women. Statistically, the women's organizations are right. An Industry, Trade and Labor Ministry study directed by Benny Pepperman for TheMarker reveals that 52% of women aged 55 to 63 are employed, compared to 66% of their male peers. There is room to suspect, however, that the disparity is largely due to paternalism.

This means women themselves consider themselves burnt out and incapable of working. So their employers also see them as on the way out, and therefore it is easier to lay off a 60-year-old woman than a man. Thus female privilege becomes discrimination. Because of their earlier retirement age, they are also laid off younger.

It's reasonable to suspect that's the explanation. We know this from Pepperman's study, which found that since the retirement age for men and women was raised in 2003, employment among older citizens has shot up, by 10%. Israel had always been behind other OECD member states when it came to employing older people. After 2003, Israel rose to the forefront in employing older workers. Interestingly, the improvement was the same for both men and women - it was up 9.7% for men, and 9.1% for women.

The current policy is destructive. Women live about three years longer than men, and therefore have to save more to finance an equal pension. But in practice, women save much less because they retire earlier.

The new Mivtachim pension fund calculated for TheMarker the monthly payments a woman would receive if she opened a pension plan at age 30 (assuming a monthly salary of NIS 5,000 and 2% annual raises ) and retired at 62, 64 or 67. If she retires at 62, she would get NIS 3,870 a month. If she works until 64, she would get NIS 4,280, or 10.6% more a month for the rest of her life. If she actually worked until age 67, she would receive a whopping 40% more - NIS 5,400 a month.

Which means insisting on women's right to retire at 62 instead of 67 costs women 40% of their pension.