(MintPress)— Chief Executive Officer of the American International Group Inc. (AIG), Robert Benmosche, has gone on record saying that the lesson to be learned from Europe’s debt crisis for governments worldwide is that people will have to work more years as life expectancies increase.
“We’re living longer, which means retirement ages have to move to 70 to 80 years old,” Benmosche said in an interview with Bloomberg released on Monday. “That would make pensions, medical services more affordable. They will keep people working longer and will take that burden off of the youth.”
When asked if he is worried about the potential spillover effects if the financial crisis in the Eurozone deepens, Benmosche, visiting his seaside villa in Croatia, says unlike many other American companies, he is not.
AIG’s recent history
AIG was the largest insurer in the world before it took a $182 billion bailout from the U.S. Government in 2008. Then the company, under Benmosche’s leadership, announced in March 2009 it was paying $165 million in executive bonuses. Total bonuses for the financial unit could reach $450 million and bonuses for the entire company could reach $1.2 billion it said at the time.
Members of Congress and President Obama, who had voted for the AIG bailout as a Senator, were outraged. Senator Chuck Grassley (R-Iowa) said, ”I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.”
Benmosche, who was tapped as chief of the insurance company in 2009, has also made headlines for stating during his first meeting with employees that Congress was composed of “crazies,” that he would not cooperate if asked to testify before Congress and that New York Attorney General Andrew Cuomo, who had investigated AIG, “doesn’t deserve to be in government.”
Cuomo was investigating the company’s expenses starting in 2007 for funding ”outrageous” expenditures, such as corporate spa retreats and hunting trips.
Benmosche also made headlines for asking for a personal private jet after the bailout, and said that he might quit over government-imposed pay restrictions. The U.S. Government still owns a 61 percent stake in AIG stemming from the bailout.
AIG chief on the European crisis
The financial crisis in Europe is entering its third year and threatens to dismantle Europe’s 17-nation currency union as Greece ponders exiting the Eurozone.
“The reality in Greece is that the people have to see that there’s no easy way out of this. 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. There is no easy medicine. My suggestion would be, be realistic. Recognize, and I think this is true around the world, governments have to accept that people are living longer, which means we have to work longer, and until we come to that realization in America, in Europe, anywheres else,” he explained in response to a question asking about his predictions as to whether or not Greece will exit the Eurozone.
When asked if his company is being affected by the debt crisis in Europe, he acknowledged that while his company does business in over 90 countries worldwide, including Greece, it anticipates the financial problems in Europe to put “some pressure” on AIG’s European operations, but Benmosche believes that the regions’ financial crisis will “work its way out”.
In Greece, the retirement age is 59.6 years, while life expectancy is 81.3 years old, according to the Bloomberg report.
According to the U.S. Social Security Administration, full retirement age (also called “normal retirement age”) had been 65 for many years in America. However, beginning with people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959. The 1983 Social Security Amendments included a provision for raising the full retirement age beginning with people born in 1938 or later.
Congress cited improvements in the health of older people and increases in average life expectancy as primary reasons for increasing the normal retirement age. In America, nearly 1 in 5 people age 65 and older are working, which is the highest percentage since 1964. That figure reflects nearly 40 percent of men and more than a quarter of women age 65 to 69. Experts say the reason for this is that the recession in America over the past few years has had a negative effect on many seniors’ savings.
“A lot of people haven’t saved enough and therefore they need to work longer in order to save more and/or need an additional income for as long as possible to supplement what they possibly could get from Social Security,” Jean Setzfand of the American Association of Retired People told CNN.
Meanwhile, newly elected French President Francois Hollande, a Socialist, recently pledged to lower the retirement age to 60 from 62 while increasing corporate and bank taxes and introducing a 75 percent levy on earnings of more than $1.2 million.
Benmosche, 68, is currently being treated for cancer, but he says he has a “very creative” doctor and plans to stay on with the company at least through 2013, as a succession plan is being put into place. In 2011 he received a salary of $10.5 million, according to the Securities and Exchange Commission (SEC).
Print This Story