Forman, Jonathan Barry --- "Pensions and Retirement" [2009] ELECD 421; in Dau-Schmidt, G. Kenneth; Harris, D. Seth; Lobel, Orly (eds), "Labor and Employment Law and Economics" (Edward Elgar Publishing, 2009)

Book Title: Labor and Employment Law and Economics

Editor(s): Dau-Schmidt, G. Kenneth; Harris, D. Seth; Lobel, Orly

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847207296

Section: Chapter 19

Section Title: Pensions and Retirement

Author(s): Forman, Jonathan Barry

Number of pages: 44

Extract:

19 Pensions and retirement
Jonathan Barry Forman


1 Introduction

A Background: a brief history of retirement
Since ancient times, there has always been a significant percentage of the
population that lived into their 50s, 60s and 70s. In the Roman Empire,
for example, some 6 or 8 per cent of the population was over the age of 60
(Dilley 2004). Of course, in ancient times, most people worked as long as
they could. There was no organized system of retirement. Instead, property
ownership typically stayed with your parents until they died, and most
ancient societies placed a high value on honoring and supporting one's
parents. Just as the ancients looked to their families for support in old age,
today Americans look to institutions: employer-sponsored pension plans
and government-sponsored Social Security.
With the advent of the industrial revolution and urbanization, pro-
duction shifted from the household level to larger and more efficient
enterprises (Munnell and Sass 2006). At the same time, life expectancies
increased dramatically.1 An increasing number of workers lived into old
age but were no longer valuable as industrial workers.
In response, large employers and national governments created
retirement programs, which defer income from working years to retire-
ment years. The earliest programs were set up by large governments,
followed by railroads and public utilities, large manufacturers, and
eventually the service sector. In the United States, for example, early
pensions included military and civil service systems, and the American
Express Company established the first formal ...