The past few years have seen a significant alteration in the UK retirement landscape. There are many factors behind this change, but the two biggest influences are probably:
- The abolition of the Default Retirement Age (DRA)
- The introduction of Pension 'Freedoms'
The first of the above changes effectively gave older employees much more control over when – or indeed if – they retired. The second gave this same group much greater choice and far wider options as to how their pension savings could be used to support their retirement years.
These changes are undoubtedly good news for the individual, yet provide a genuinely new problem for many employers. For it is now much more difficult for employers to predict when older employees may elect to trigger partial or full retirement. This uncertainty obviously has implications for succession planning, a vital component of any successful organisation's long-term business plan.
So what can be done to manage this issue better?
It’s a tricky one. Many employers have understandable concerns about speaking to any individual employee directly on such issues. No matter how innocent a conversation, it is always possible that a line will be crossed and the employee may perceive this as a step towards age discrimination. The result of this conundrum is that many employers have now opted to avoid such conversations altogether.
But is there not some middle ground here?
Employers who offer Financial Education courses to their entire workforce sometimes tailor elements of the course to certain age groups, such as under-30s. This approach is generally welcomed as being more relevant to the audience in question, and as long as attendance at the course is voluntary, it is unlikely to attract accusations of ageism.
It therefore follows that a similar approach could work for older workers as well, with tailored courses perhaps being offered to the over 50s. This is one for the employment lawyers – and care would need to be taken with smaller employers to avoid isolating just one or two individuals – but this is certainly an approach that could be considered by many organisations as a way of helping their employees and their business planning at the same time.
As a direct result of attending such courses the employee is likely to much better understand the retirement choices available to them, and will be better able to plan for their desired retirement date. It is therefore to be expected that this additional level of employer-funded support will be welcomed by the employee. This more open approach to this key issue may help both parties understand better when retirement is likely to be triggered.
But the wins might not stop there. Employees looked after in this way are likely to have fewer money worries (and therefore able to better focus on their work), and also feel more engaged with their employer. Both significant wins for any organisation.
So as the retirement and older workers landscape continues to evolve, more employers should consider new approaches such as the above.