More on late starting

by Chris Bertram on November 26, 2003

In “a post yesterday”: about the later age at which academics get proper jobs nowadays, I focused on how this means that academics now have fewer children later (or none at all). But there’s another consequence of the way the job market and accreditation process have changed: pensions. Academics here in the UK still have a final salary pension scheme (which is nice). The scheme assumes to that to receive a full-value pension (50 per cent of final salary) you have made 40 years worth of contributions. I’ve even met some academics — appointed at around age 23 in the 1960s — who’ve managed this. But those who have entered the profession late (and burdened with debt) from the 1990s onwards, at age 30+ will _never_ pay in their 40 years (given retirement at 65) and will therefore receive a lower income in their old age. I’ve assumed in this post that the system is the UK one, but obviously the point generalises beyond final-salary schemes. Those who earn proper salaries later (and are debt-ridden) will not contribute so much towards their pension — especially if they are trying to bring up a delayed young family! — and will suffer in their retirement.



reuben 11.26.03 at 11:45 am

This has been a very interesting thread. One factor you haven’t mentioned (I think) is the way in which the timescales of the academic job market squeeze out those who, for one reason or another, don’t finish university at 21 or 22. Take a really bright woman who didn’t go straight into university out of high school and then decides to work her way through in her mid-twenties. If she completes her BA at 26, she’s so far behind the curve that academia is – at best – an extremely risky option, particularly when child/family issues are factored in. Perhaps this is fair in some ways – after all, the job market is oversubscribed – but I can’t think of many other professions where three or four years in your early 20s are enough to almost completely eliminate the chance of pursuing your desired path for the next forty years.


Matthew 11.26.03 at 2:18 pm


Isn’t this just a direct consequence of the fact they enter the workforce later? What I mean is that it’s not the final salary pension discriminates against them — it would be the same under a money purchase pension, wouldn’t it?



Chris Bertram 11.26.03 at 2:50 pm

Yes, that’s what I meant to say in the last 2 sentences.


bandiera 11.26.03 at 2:54 pm

My first thought is to wonder how long final-salary schemes will prevail in academia. My second is to wonder why you could not make adjustments to the indices for new demographic realities.

My first UK employer’s scheme worked on 1/57 of the final salary per year of service. If you managed 35 years, you’d have 35/57 or 61% of your full final salary. Not bad. Anything over 29 years and you’d be doing better on this scheme that the one in the FPP.

My second employer has a personal pension scheme with age-based voluntary overpayments, which, as a later-in-life starter, I really like the looks of. Why not have an option to buy extra years to top yourself up?

What the heck, doesn’t the government want us all to work to 70 now anyway?


nick 11.26.03 at 4:49 pm

(given retirement at 65)

Is that much of a ‘given’ in British academia? One of my presumptions about my return to academia, if and when it happens, is that they’ll probably carry me out in a box. Is that just an Oxbridge thing, and do normal universities try to enforce the statutory retirement age?


Matthew 11.26.03 at 4:52 pm

Yes, sorry I didn’t quite register that bit. But also, I think whas I’m trying to say is that simiarly academics can’t afford to buy as large houses as they once could because they can only meet mortgage repayments for 30 years, rather than 40 years – late starting is basically bad all around. I suppose in an ideal world people would get paid more to catch up…


loren 11.26.03 at 6:02 pm

Seems to me there’s a study waiting to be done on moral hazard and retirement planning: do late career starts lead to correspondingly riskier personal investment strategies? For instance, are new assistant professors in their mid-to-late 30s more likely than others to try to compensate for anticipated shortfalls in their institutional retirement plans by throwing money into, say, small-cap growth funds or other volatile investments?


Nasi Lemak 11.26.03 at 6:45 pm

“Normal” UK universities have been enforcing a statutory retirement age (and indeed encouraging early retirement) just like Oxbridge. However something I haven’t been following that closely appears to mean that retirement ages will no longer apply to Oxford from ’04 or so – whether that’s for new contracts or for everyone, and for Oxford/bridge or everywhere, I don’t know. (Let’s face it: this message is an extended confession of ignorance.)


Sindhu 11.26.03 at 8:01 pm

It’s not academia as such, but the cost of doing a doctorate. Having finished a doctorate at 26, then giving up academia at 28 meant starting at entry level in a new sector with no compensation for an advanced qualification. I am now resigned to working until I drop. Wonder how it affects graduate students in the US who tend, on average to complete longer? Do they have more pension perks as a teaching assistant?


Another Damned Medievalist 11.26.03 at 8:26 pm

Well, my retirement plan just kicked in last year, and will take 7% of my salary, match, invest, and immediately vest, as long as I work, full- or part-time, in my state. The problem? I am neither tenure-track nor permanently full-time, and I’m now over 40 (I finished the PhD at 37. OTOH, it seems that age and experience are becoming greater advantages in looking for tenure-track teaching jobs, because the institutions know their commitment is lessened by about 20 years!


Lawrence Krubner 11.27.03 at 6:26 pm

Pensions need to be made more flexible. They should be more portable from job to job, and there is a need in all countries to eventually switch over to having something to do with the actual cash you’ve paid in, with no artificial cut off lines set at 40 years or 30 years or 20 years.

But even if all that was done, nothing would change the fact that it is a bad economic decision to take on a great deal of debt to get into a profession that pays poorly.


Lawrence Krubner 11.27.03 at 6:32 pm

Having finished a doctorate at 26, then giving up academia at 28 meant starting at entry level in a new sector with no compensation for an advanced qualification

That’s an odd remark. If you’ve got an advanced degree in a valuable area then as soon as you get out you get swamped with cash. I’ve got friends just now getting out of medical school at age 31, and they are getting offers from $120,000 to $250,000.

The woman from whom I rent an apartment is still struggling to finish her Ph.d in systems engineering, but 2 years back when she ran out of money she took a year break and worked as an engineer and got paid $65,000 to do the work. Because she lives cheap the $65,000 was plenty to replenish her savings.


Sindhu 11.27.03 at 10:28 pm

try persuading people outside academia of the transferability of the skills needed to complete a PhD in political philosophy…

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