80-points. These were joyful, magical words when I worked. “Do you have your 80-points?” “How many years until you get your 80-points?” Retirement with full benefits was reached at 80-points: the sum of your age and the years of employment. Health benefits and a defined benefit pension were secured once an employee achieved 80-points; the ability to comfortably retire with health and financial benefits was achieved.
The 80-points pension plan was created before I was born. Employees were loyal to their employer who rewarded long years of service with retirement income that usually enabled them to comfortably live their remaining years. The pension payments were usually a percentage of one’s salary (normally 50% or higher), determined through a formula based on their years of employment and retirement age. Social Security and savings added to a retiree’s pension income. Most retirees’ expenses were lower during their later years, so their reduced income was adequate. 80-points meant financial security and freedom from the daily work grind during late life.
This utopian pension scheme was questioned during the mid-1980’s energy bust. I watched workers of all ages getting laid off. Many professionals, who had been brought up under this ‘loyalty’ scheme, were given severance packages. Suddenly, loyalty to a company in exchange for the 80-points retirement benefits was unbalanced since employees could be severed before the golden handshake. Younger employees started exiting for better opportunities instead of patiently working toward their 80-points.
When I lived in Europe, I witnessed the demise of defined pension plans. Danish employees with less than 15 years of service lost their defined pension plan. These employees were compensated and placed on an employer-matching contribution plan. The change was enacted to lower expenses and give younger employees the ability to retain a tax-deferred 401k if they chose to leave the company or were severed. The downside was that younger employees did not have the defined pension plan with its higher retirement payments. I watched country after country move off the defined pension plan. Today, only legacy employees have defined benefit plans. Over time, it will be a relic of the past.
This year, we have witnessed riots in France after the Macron government raised the national retirement age from 62 to 64. France has the most lucrative pension system, something the country can no longer afford without raising taxes. It has one of the highest tax rates in Europe and the lowest pension age. People are living longer and there are less workers to pay into the pension system. Supply and demand are not balanced, and the government is being responsible by raising the retirement age, but the public feels entitled to the existing pension system. French workers look forward to their early retirement benefits, just like I looked forward to achieving my 80-points. The difference is that my company set aside my retirement funds while I worked. My former employer’s current employees are not paying for my retirement.
The French people enjoy wonderful retirement benefits in a beautiful country but can no longer afford it. If one lives longer, then what is wrong with working longer? The same reasoning is now being debated in US politics about Social Security. Supply and demand are not balanced, but American political leaders observing the French protests when pension benefits are reduced may decide it is best to delay decisions for another time … another leader. It will only get more difficult with time.
I recently read that someone advocated reducing the pension age for French hourly workers and raising the pension age for French professional workers. The basis of this dichotomy was that lower-paid hourly workers started working earlier, say at 18 years old, and have a more difficult life. Professionals spent years in universities, are well paid, and have a cushy life. I reflected on how hard I worked to obtain my higher education degrees, the long working hours (nights, weekends, holidays), and those many international flights with jet lag, poor food, and bone-weary days. I doubt most doctors, CPAs, and lawyers would say that their work life was cushy.
There is no free lunch. Saving for retirement requires discretionary income, a long-term strategy, and steady employment. It is highly unlikely that the pension system at the start of a person’s career will be the same when he or she decides to retire. During a 40+ year working lifespan, things usually change. One of the constants in life is change.
Watching angry French protesters riot in the streets over their government pension system awakened me to how difficult it is for citizens and governments to accept economic facts and act responsibly. Pension benefits are important, and people are understandably upset when pensions are reduced, but my retirement foundation is not my 80-points. Rather, it is my faith—something far greater than myself. I am both atelic and telic; I must remain in the moment enjoying God’s creation and listening for the Spirit, while living, as commanded, focusing on the Kingdom. I can do this with or without my 80-points.
