Making retirement redundant
02/12/2010
Good news! Retirement will be made redundant when the Government plans to abolish the default retirement age of 65 next year.
Older workers will no longer go through the farce of being capable and willing to work aged 64 and 365 days to find that just one extra day changes their prospects and aspirations for the rest of their increasingly long lives, plunging many into unwanted economic inactivity.
Age UK research earlier in the year showed that workers forced into retirement cost the UK £3.5bn a year with a huge £2bn of this being lost earnings of the workers themselves. In future they will be given the choices they deserve basing their decisions on their need and desire to work, just like anyone else.
While the research also showed that 90% of older workers were opposed to forced retirement, the proposed changes will replace this enforcement with older workers being forced to resign as their way of leaving employment, again just like anyone else.
For someone who has spent 20 or 30 years with a company, a resignation party might not quite be the way they had hoped their loyalty and commitment would be recognised! Nevertheless, bearing in mind that over the last few years the number of people planning to work past state pension age has increased from 40% to 71%, the plans will probably be met with approval by most older workers, not least because it will increase their earning potential for economic good.
But for many employers with an older workforce the removal of the default retirement age is being seen as a real headache. For example, it is possible, or even likely, that the word “retirement” will become a taboo subject in the workplace in a similar way to asking a woman if she plans to have children has become. It is clear that if employers want to avoid discrimination claims in the area of “retirement” then they will need to develop on-going dialogues about future career/life plans with employees of all ages. This should help with workforce planning as well as planning for learning, development and succession across the whole workforce.
Research recently produced by Cranfield School of Management for the Employers Forum on Age (EFA) about Career Transitions suggested that for employers wanting to support their workers with the decisions ahead, “pre-retirement planning at a much earlier age than is generally the norm (if offered at all by employers) may be useful.” Support for future planning is therefore a key way of helping workers prepare for life outside full-time permanent employment.
Earlier research in the US shows that just as individuals need independent financial advice, they also need to plan and prepare their assets i.e. diversified interests and relationships, which they can then develop and draw on in the future. Social engagement and productive activities are shown to have a positive impact on health and well-being.
Employers can play their part in ensuring that their workers are well-equipped to deal with the time when they leave work. There will be mutual benefits to both employer and employees alike as employees who feel more comfortable about their futures outside work are more likely to want to leave.
The main implications of the changes revealed in the EFA research are in relation to performance management, succession planning and training and development which “can be overcome through careful planning”. It stated that “the removal of a mandatory retirement age does have implications for employers in the HR policies and practices used and it also provides opportunities for transferring skills and expertise”.
An opportunity is being presented to employers who view the proposed changes to retirement positively. The opportunity is to replace retirement with a whole suite of more effective and more competitive employment practices which will also help to reduce potential discrimination claims.
Robust performance management, improved line management capabilities, on-going learning and development, flexible working options, career and life planning support for employees of all ages are just some of the obvious benefits. These can also help the employer to realise the much talked-about “employer of choice” positioning which is essentially about attracting and retaining the talent needed to compete both locally and globally. In this context, making “retirement” redundant, with workers choosing to resign at the end of their working lives, could be the key to cultural change and improved employment practices for everyone.
Judith Cork runs a consultancy focused on helping organisations with the issues of the ageing population, (older workers and older consumers). Judith develops and facilitates Retirement Readiness Programmes to support employers to help their employees get better prepared for the time outside full-time permanent employment.
Contact Judith at judith@judithcork.co.uk or 01484 434 969
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