The location should probably tell us all we need to know. Speaking from his seaside villa in Dubrovnik, Croatia, AIG’s CEO Robert Benmosche told Bloomberg that Europe’s debt crisis “shows governments worldwide must accept that people will have to work more years as life expectancies increase.”
It’s not exactly news, but the new retirement age he suggests certainly is—80.
“Retirement ages will have to move to 70, 80 years old,” Benmosche, who turned 68 last week, told the news service. “That would make pensions, medical services more affordable. They will keep people working longer and will take that burden off of the youth.”
Friday’s disappointing employment report heightened investor anxiety and sent markets sharply lower. The crisis in Europe, now in its third year, threatens to destroy the 17-nation euro currency union as Greece contemplates exiting the euro and “Spain sees its bond yields rise and banking industry falter.”
Greece abandoning the euro could be a disaster for the country and Europe must work to keep that from happening, said Benmosche, whose company was the world’s biggest insurer before nearly collapsing in 2008 and then taking a U.S. bailout.
“People in Greece have to see there is no easy way out of this” and the government must get them to work longer, he said in the June 2 interview on the Adriatic coast. “If not, and if they go to their own currency, I think they will see huge inflation and it will be devastating for people on fixed incomes.”
Greece, where the average life expectancy is 81.3 years, has an effective retirement age of 59.6, among the lowest in Europe, according to data compiled by Bloomberg.
“We have gone through the crisis in Argentina and other countries over time, so we have experience,” Benmosche said, when asked about global operations lending a hand in Greece.
The short-term nature of some of the company’s insurance contracts would minimize disruption if Greece stopped using the euro, he said.
“Our premiums would convert to the local currency, but if they do, so will our obligations,” he told Bloomberg. “We will deal with the rules at the time.”
Returning to the subject of the domestic economy, Benmosche told Bloomberg that people and businesses in the U.S. lack confidence and were hesitant to invest as financial regulation and tax policies remain unsettled.
“I am optimistic that we’ll continue to grow, and if we get past this period of uncertainty and gain confidence again in the U.S. economic system, that will help lead the world out of the situation we are in today,” he said.