Employers don't know when employees will retire
And employers are having to rethink the way they handle their retirement strategy for workers.
Only a little more than half of employers (53 percent) really have a handle on when their employees will retire, despite the fact that 83 percent of bosses have a significant number of employees at or near retirement.
That’s according to the 2018 Longer Working Careers Survey from Willis Towers Watson, which also finds that employers are having to rethink the way they handle their retirement strategy for workers.
It’s not that they’re not concerned about it; 81 percent say that managing the timing of their employees’ retirements is an important business issue. But only 25 percent do so effectively.
They’re worried about loss of talent when older workers retire—54 percent say that the loss of talent due to retiring workers will be more significant than other labor market risks over the next five years.
But they’re also concerned about the toll remaining older workers will take on younger hires, clogging up the promotion pipeline (37 percent), and the toll they’ll take on salary budgets (41 percent) and health care costs (49 percent).
In fact, while 80 percent of employers say that older employees are crucial to their success, many are not really acting that way, with 50 percent expecting difficulty finding workers with similar knowledge and skills over the next five years and 48 percent worrying about the loss of organization-specific knowledge.
They are taking action, however, with 66 percent offering financial wellbeing or retirement planning programs tailored to older employees approaching retirement and 19 percent planning on such programs either for 2019 or 2020.
In addition, 36 percent have modified working conditions to suit older employees; that’s expected to increase to 43 percent by 2020.
Plus they’re getting more flexible, with 30 percent letting workers change positions (such as shifting from management to individual contributor); that could rise to more than half by 2020.
Then there’s part-time; 27 percent of bosses are allowing workers to cut back on hours, and that could increase to 45 percent by 2020.
Other moves expected to increase are consulting arrangements and phased retirement.
For the former, 49 percent of bosses let their retired employees who are collecting benefits work as consultants or contingent workers, while another 10 percent might put such a policy in place by 2020.
A similar percentage, the report says, hires experienced retired employees in their industry on a consulting or contingent basis.
Phased retirement isn’t much in vogue at the moment, with only 9 percent of employers having a formal phased retirement program, but this too is expected to change to as much as 23 percent by 2020.
Informal programs, says the report, are much more common, since they allow employers to bypass some of the compliance and administration rules governing formal policies.
But here too such opportunities are generally restricted to higher-level professionals, and not offered to sales, administration or hourly staff.
“Older workers are clearly a sought-after resource, and our research shows there is a definite supply of employees who would like to work into their 60s or beyond,” Lauren Hoeck, director, Retirement, Willis Towers Watson, said in the report.
Hoeck added, “Many employers misunderstand their employees’ motivations and circumstances for retiring. Therefore, they do not have a grasp on their likely retirement patterns and are vulnerable to the workforce issues associated with employees who linger for financial reasons but have lower engagement and productivity. We believe employers can effectively draw on the expertise of older workers, and this opportunity will require careful management.”
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