Simon Nash: How will the changing state pension age affect employers’ pension strategies?

The Chancellor’s recent announcement of bringing forward the rise in the state retirement age came as no surprise to HR professionals. In fact, the only surprise may have been that his measure did not go far enough.

On 11 December 2013, the Office for National Statistics released an update to its projected mortality figures, predicting that girls born in 2013 would live to, on average, 94 years of age, with boys still living slightly shorter average lives.

What is more, these statistics reveal that more than one-third of those born in 2013 are expected to reach the once-rare age of 100, 30 years after the recently updated retirement age. Future Chancellors will clearly have to revisit this issue frequently over the decades to come.

What does this mean for employers? On the employee benefits side, it will impact our cost models for health-related benefits and retirement savings, but those are small and incremental changes.

More fundamentally, it will require us to get used to longer career tenure, and later retirement of people in their 60s and even into their 70s and beyond. This has an impact on job design, career structures, salary progression, and learning and development.

This can be seen as an exciting prospect, of creating an employment proposition that attracts and retains a workforce with broad skillsets and deep experience in the workplace. There will also be employees who have seen many of the fads and fashions of management come and go over their careers.

This makes them somewhat immune to the normal propaganda of employee communications and eager to participate in an authentic conversation about the business. Time to grow up, you might say. About time too, I say.    

Simon Nash is HR director at Carey Olsen