Treasury plans further rise in retirement age

Treasury chief Doron Cohen: We will soon submit a bill that will be included on our current economic agenda, either in the next economic arrangements bill or in a new pension law.

"We must extend people's working lives. Pension rights were set when life expectancy was almost 20 years less than now. No serious economist or statistician supports keeping the retirement age unchanged," Ministry of Finance director general Doron Cohen told "Globes" today, in the first response in the renewed debate over raising the retirement age.

"Anyone who is worried about people's ability to live with dignity in their old age must agree to this," says Cohen. "We will soon submit a bill that will be included on our current economic agenda, either in the next economic arrangements bill or in a new pension law."

Minister of Industry, Trade and Labor Shalom Simhon said in response that such a sensitive issue should not be included in the economic arrangements bill (an annual bill which supplements the budget law), because that would be tantamount to a parliamentary trick.

Cohen said that a welcome demographic change that affects three key elements, and which greatly concerns the Ministry of Finance are the increase in the labor force, which is a key economic growth driver; the ratio between workers and non-workers, which also affects the economy's ability to grow and finance welfare payments to non-workers; and the ability of people to accumulate sufficient money in their pension to live with dignity after retirement.

Cohen anchored his remarks with numbers: the growth of Israel's working-age population (people aged 25-64) will slow from 2.2% a year in 1995-2010 to 1.2% a year in 2010-30, which will reduce annual GDP growth from 3.6% to 2.5%. "We assume that there will be fewer working-age people and more pensioners after the baby boom," he says. "Therefore, growth per capita will fall as a result of population growth. Working-age people will have to finance both children and pensioners."

Published by Globes [online], Israel business news - www.globes-online.com - on July 19, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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