CUBA: Cuba boosts retirement age as many go gray

. BALTIMORE, Maryland / The Baltimore Sun / Associated Press / April 5, 2009 HAVANA - Like much of Cuba's work force, Alfredo Congas is going gray. The chain-smoking 61-year-old retired last March after 42 years as a hotel doorman and rum company driver. Now he's working 12-hour shifts as a security guard to supplement his pension. Congas' new job brings his total income - pension plus paycheck - to the equivalent of $23.45 a month, about $4 more than the average state wage. Poverty forces most of Cuba's 2.2 million retirees to get jobs to supplement their pensions. Many scrape by, selling peanuts and newspapers or guarding cars for tourist change. Now, even that is harder to do. Faced with an aging population and a life expectancy of 77.3 years, nearly the same as in the United States, Cuba has raised the retirement threshold by five years, to 60 for women and 65 for men, delaying the second jobs many have counted on to make ends meet. About 90 percent of Cubans have government jobs, and both sexes must now work at least 30 years, not 25, to get a full pension. The overhaul, to be fully phased in by 2015, means that Cuba's retirement age will exceed Latin America's average of 59 for women and 62 for men, according to Carmelo Mesa-Lago, an expert on the Cuban economy at the University of Pittsburgh. The island's population is aging faster than that of the rest of the region - 17 percent will be 60 or older by 2010, compared with 9 percent across Latin America today, according to the United Nations. A quarter of Cubans will be older than 60 by 2025. As Cuba's work force shrinks, the ratio of workers to retirees has narrowed from 7-to-1 in 1970 to 3-to-1 today. Had the country not raised its retirement age, the ratio would have been 2-to-1 by 2025, the government said. State pensions, though small, were once enough to live on in this communist country, where housing and health care are free and the government subsidizes food, utilities and transportation. But the collapse of the Soviet Union cost Cuba much income in subsidies and trade, crippling the economy and sparking widespread shortages. A U.S. dollar-fueled black market mushroomed; prices soared and Cuba's peso plunged in value. The minimum monthly pension was worth about $92 in 1989. Adjusted for inflation, it is now the equivalent of $9.50. Many countries are making tough decisions to keep funding social security programs as populations grow older. The U.S. retirement age is to increase to 67 by 2027. A handful of former Iron Curtain countries have privatized their pension systems, as well as raising retirement ages and slashing benefits to stretch resources. But privatization isn't an option in Cuba, where most forms of free-market enterprise are illegal. Instead, a 1994 tax law requires state firms to contribute 14 percent of each worker's salary to a national social security pot. It also obligates employees in profitable sectors such as tourism to contribute an added 5percent. Still, contributions cover less than 60percent of current pension costs, with the rest financed by the federal budget. Mesa-Lago estimated that the sum approached 6.3percent of Cuba's gross domestic product in 2006. The funding crunch has grown more urgent since last year's hurricanes caused more than $10billion damage, leaving nearly 1million homeless, crippling farming and forcing costly food imports. The government says 3million people attended town hall meetings to discuss the potential retirement age increase, with 99.1percent supporting it. Workers who attended say that many complained, but didn't dare oppose the measure in a public show of hands. "I'm not prepared for this," said Grace, 52, a high school chemistry teacher who supports her 23-year-old son and 86-year-old mother on a monthly wage of about $25. She asked to be identified by middle name only to avoid problems. Now, she'll have to defer retirement and plans to tutor for two more years. Much of what the Cuban government saves by delaying retirement, it will dole out in bigger pensions. Payments are rising to 60percent of an employee's peak five years of earnings, from 50percent. For some, the decision to keep older citizens working rather than cracking down on younger, job-ditching countrymen is shaking their faith in the communist revolution. A 34-year-old nurse, who declined to be named for fear her comments would hurt her husband's army career, said the retirement changes leaves her even "more disillusioned." "I'm young," she said, her eyes welling with tears. "But I'm less optimistic than before." Copyright © 2009, The Baltimore Sun