The Shekel Drops / Don't Envy Les Femmes

A woman retiring earlier has more years to live in retirement, so she will necessarily get a lower monthly stipend from the social security network.

Israeli women envy the ladies of France, and this time it isn't for their chic or figures. The women of Israel are envious because of the difference not in hemline or waistlines, but in retirement age. Israeli women don't want their retirement age to be raised either, but while in France the battle has been against raising that age from 60 to 62, here it's over raising the number to 64.

French pension- AP

In 2003, when reforming pension rules, the Finance Ministry increased the retirement age for both men and women. For men it rose to 67 and for women from 60 to 62. Now comes the second stage when it's supposed to rise to 64.

The difference in retirement age between men and women lies in tradition, not solid reasoning. If anything, women live longer than men, which indicates that in their early 60s, they're probably in better shape. Physiologically, they should retire later than men, not before. Certainly there are no physical grounds for their earlier departure from the workforce.

Yet it's traditional, and over the years it's turned into a privilege that women wouldn't dream of forgoing. It's one of the achingly few places where women enjoy positive discrimination, and they aren't about to let it go.

Doomed to poverty?

Talia Livni, chairwoman of Naamat, is spearheading the battle against raising the retirement age for women from 62 to 64. She argues that women can't be asked to work more years because of the erosive nature of their employment.

"A large proportion of women work in grinding jobs such as nannies, helpers at kindergartens and nurses at hospitals," she says. As such, by the time they reach retirement age, they're worn to the bone. They can't work anymore - yet here they're being asked to work two more years or they won't get their full benefits. But they can't.

The upshot is that raising the retirement age dooms these women to poverty, Livni says. "At the end of the day, a lot of women get tossed out of the workforce before they reach 60. Deferring retirement worsens their plight by extending their wait for pension rights - without creating jobs for them." In other words, they spend more years in poverty, waiting for their stipends, and have no options.

Her argument is moving. But it also lacks grounds in reality. First of all, to say that women are ground down more than men and therefore can't last to a later retirement age of 64 - three years before men lay down their tools - is unlikely. If anything, women tend to be healthier than men in that age group.

Statistics do not support Livni's argument either. At the behest of TheMarker, the economic research department at the Ministry of Industry, Trade and Labor analyzed the employment of the relatively elderly. It found that from 2003 to 2009, the employment rate of elderly men (aged 55 to 66 ) increased 9.7% and the employment rate of elderly women (aged 55 to 63 ) increased 9.1%.

Second, Livni's claim that women don't reach retirement age but get fired beforehand could be explained by the fact that they simply retire earlier. It's easier for an employer to fire a worker right before retirement. If women retire earlier than men, they simply tend to get fired at an earlier age. In this case, the discrimination works against them.

One could argue that the earlier retirement age works against women: An employer might reason that their shelf life at the company is shorter, and opt for men.

Double whammy: Saving less, living longer

Worst of all, early retirement exacts a heavy price by creating poverty in a form that Livni neglected to mention entirely. It's the same poverty that the women of France are ignoring.

A woman retiring earlier has more years to live in retirement, so she will necessarily get a lower monthly stipend from the social security network.

The double whammy of a longer life span, coupled with more years in retirement, is a recipe for disaster when it comes to pension income for women.

Women save less for their pensions because they work fewer years, and have to live longer on that lower sum.

The New Mivtachim Pension Fund did some math for TheMarker on the effect of retirement age on pensions. The base assumption for the calculation is pay of NIS 5,000 a month that increased by 2% a year from age 30.

It turns out that a woman retiring at 62 will receive a pension of NIS 3,870 a month. If she retires at 64 instead, she will get NIS 4,280 a month.

The extra two years of work increase her monthly income by 10.5%, plus there is the extra two years of income from work.

If she slogs on at work to age 67, which the law lets her do, her monthly stipend grows to NIS 5,700 a month, 39.5% more than a woman retiring at 62.

Now you know the price of Naamat's battle to keep women's retirement age at 62. Women stand to lose nearly 40% of their potential monthly income for all their remaining average 24 years left to live.

By the bye, a man retiring at 67 gets less than the woman: NIS 5,300 a month. Why is that? Because the pension fund calculates that it will have to keep paying money to his widow when he dies. Women generally live longer than men. Still, if they retire at 67 and women at 62, they do better on a monthly basis.

Early retirement, therefore, is not a privilege for which women should be fighting tooth and claw. It's a punishment that diminishes their pension and reduces them to poverty. Naamat's fight to preserve early retirement ages is an ill-advised one that does women bad, not good.

Naamat is right about one thing, though. The retirement age of women shouldn't be increased without making sure that women can survive in the labor market for longer periods of time, with the help of proper training.