Business: Lucking Out on Later Retirement

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Despite the new law, few workers want to stay past 65

Last April, Congress took a flying leap in the dark. Responding to pressure from politically powerful oldsters, it raised the mandatory retirement age from 65 to 70, although so little study had been done that estimates of the economic and social consequences were only horseback guesses. The move alarmed businessmen, who feared that retaining aging workers would clog the channels of promotion and reduce the hiring of young people, especially women and blacks. But when the law finally went into effect on New Year's Day, the worries had substantially diminished. Many employers now think the law will have little effect at all, beyond raising the spirits and incomes of those work-ethic veteran employees who decide to hang around.

The big question all along has been: How many employees turning 65 would choose to keep working? It will not be fully answered until the law has been in effect a year or two, but the experience of companies that changed their policies earl—or never did force retirement at 65—indicates that the numbers will be small. As companies have made retirement benefits more generous, the trend for decades has been toward earlier, not later retirement. For example, at Republic Steel Corp., which has never had mandatory retirement, less than 1% of the 40,000 workers stay on past 65; the average age of retirees is below 62.

Production workers, in particular, are expected to continue laying down their wrenches and torches as soon as they can, for an understandable reason: the labor is physically wearing. The Oil, Chemical and Atomic Workers union has fought hard to negotiate pension plans specifying a "normal" retirement age of 60, and that is the actual average age of its members who retire.

Office workers, who sit at desks in pleasant buildings, may stay on in larger numbers, but not all that much larger. Less than 15% of Du Pont's employees, both blue-collar and whitecollar, elect to keep working until they reach 65. Says Employee Benefits Manager Leonard J. Bardsley: "This trend continued through 1978 even when they knew of the change in the law." Pitney-Bowes, Inc., abolished mandatory retirement last April 1. Since then, 105 of its workers have retired on or before their 65th birthday, and only ten have chosen to keep working more than a few months past that age. Singer Co., which long has had a mandatory retirement age of 68, finds so few workers wanting to stay around after 65 that it has not bothered to count them.

Business opposition has also been dulled by some special provisions in the law. The statute permits companies to continue forcing retirement at 65 for "bona fide" executives and people in "high policy-making positions," provided they have served in those jobs for at least two years and qualify for pensions and other retirement benefits totaling $27,000 a year.* And most companies will indeed compel executives to retire at 65. Their stated and valid reason is that new blood and new ideas are especially vital at the top. An unspoken but powerful reason is that every board member dreads telling a 65-year-old chairman: "Joe, you just can't cut it any more." It is much easier to say: "Joe, we would love to keep you, but a policy is a policy."