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Economic downturn may persuade older workers to delay full retirement
Toronto (25 November 2008) – Almost three quarters of Canadian employers view phased retirement programs as an important element of their human resources strategy over the next five years, according to a recent survey conducted by Hewitt Associates, a global human resources consulting and outsourcing company. Moreover, factors such as the impact of the current financial crisis on retirement savings and a growing interest on the part of Baby Boomers in working past early retirement age may mean that older workers can be more easily convinced to stay on the job.
"Phased retirement programs allow employees nearing retirement to reduce their work commitment, while still remaining active with the same employer," said John Tompkins, a senior benefits consultant with Hewitt. "Older employees are being offered reduced workdays/workweeks, job sharing and flex time, while retirees may be rehired by their former employer as part-time employees or consultants."
Over half (52.5 per cent) of the 171 survey respondents already have a formal and/or informal phased retirement program in place. Another 33 per cent reported that they do not currently offer phased retirement but are interested in establishing a program. Organizations in the United States express a similar interest: 47 per cent currently offer phased retirement programs and almost 40 per cent more plan to do so, according to a survey conducted by Hewitt in June 2008.
"The impending mass exodus of the Baby Boomers from the workforce has employers concerned about the vast amount of knowledge and experience that will leave with them," stated Linda Byron, a senior retirement consultant with Hewitt. "When we asked organizations for their primary reasons for implementing these programs, they indicated their motives are to facilitate the transfer of key skills and knowledge to less experienced employees, ease the difficulty of replacing key skills, and have the opportunity to use experienced employees in new roles or for special projects."
In order to create effective phased retirement programs, employers need to:
- Identify where the departure of those approaching retirement will leave them with a skills shortage that is difficult to fill;
- Ascertain what type of arrangement would be appealing to this group of older employees; and
- Determine how they can accommodate phased retirement, while meeting business objectives.
"In many cases, employers that already offer flexible work arrangements may not need to introduce special phased retirement programs for older workers," noted Byron. Currently, the phased retirement programs most frequently offered by Canadian employers are year-round, part-time employment (provided by 20 per cent of organizations) and work on special projects (provided by 15 per cent).
"For some older workers, the ability to continue to accrue savings will be enough to keep them on the job - perhaps even full-time," said Tompkins. "However, financial considerations aside, employers realize that in order to encourage near-retirement employees to continue working, they have to enable them to make a valuable contribution to the success of the organization and give them interesting, challenging work to do. They must focus on engaging this group of employees, just as they do others in the organization."