HR HIGHS
Phased retirement programmes can ease talent shortage
Faced with the daunting prospect of losing priceless talent to retirement, quite a few organisations are going the extra mile to retain valuable employees approaching retirement age through the implementation of phased retirement programmes.
Many employees in the 55-65 age groups are looking to unwind from their high stress jobs, but are not yet ready for total retirement. Phased retirement offers the perfect go-between, enabling older workers to gradually decrease their working hours and/or workload over a few years prior to complete retirement from service.
Phased retirement programmes have a good many benefits to offer to both the employer and the mature worker.
From an employee’s perspective, even an informal phased retirement arrangement can serve as an incentive to continue working, result in more motivated work and better work-life balance.
For organisations, it is a way to tackle the talent crunch and retain the services of loyal and skilled staff that can contribute to the business.
Younger personnel and new recruits who may be handicapped by their lack of experience and unfamiliarity with office culture also profit from the training and guidance of older staff who have valuable knowledge and experience to share.
Phased retirement options may include flexible work schedules, fewer hours, job sharing or moving to new job responsibilities altogether. Many organisations allow employees to work part-time and accrue benefits based on time worked. Others provide a hefty gratuity for employees opting for phased retirement programmes.
Formal programmes for phased retirement often provide for fixed periods of transition, enabling employees to enjoy partial pension benefits apart from additional pay and incentives.
In some cases, the employee may continue to be associated with the organisation post retirement.
Phased retirement programmes have by and large elicited mixed responses from employers. Many such programmes that started off with great enthusiasm soon veered off the track when they became too unwieldy to be properly controlled and monitored. The cost factor is also a significant disadvantage in some cases.
As a first step in implementing a phased retirement programme, the organisation needs to seriously consider the compatibility of a flexible retirement policy with the nature of work and organisational culture. Phased retirement programmes can make a definite difference to companies with a large number of retirement-eligible employees.
Such programmes are also beneficial in addressing temporary talent gaps that may be severely limiting the company’s ability to compete in the market.
In situations where the management is struggling to retain hard-to-replace employees with specialised and firm-specific knowledge, phased retirement programmes serve as a peace offering, wooing departing employees afresh and preventing them from transferring the knowledge to competitors upon retirement.
A phased retirement agreement must clearly spell out the following details:
• The minimum age at which an employee becomes eligible to participate in the programme and a limit on the number of years it can last.
• Details about how work would be reduced.
• Information related to pay, benefits, and pension.
• The procedure for opting out of a programme, and its implications.
Employers may also have to make amends to existing pension plans and provide incentives for workers to participate in the phased retirement programme.
Formal phased retirement programmes are still rare, with most employers preferring to hedge the issue by dealing with it informally on a case-by-case basis.
This is partly because many employers are unwilling to get entangled in the legal intricacies of pension laws that govern retirement programmes. Employers are also reluctant to include all of their retirement eligible staff in such programmes, which is another reason for the lukewarm response to formalising such initiatives.
Informal arrangements work best when a company wants to offer phased retirement exclusively to select people, or is planning to experiment or customise the working arrangements. In general, informal arrangements tend to become increasingly difficult to manage if they are offered to a large group of employees.
Despite the vast disparity between what workers expect and what most employers are willing to provide in terms of phased retirement opportunities, phased retirement programmes are picking up, and the situation is likely to get better for retirees in the coming years.
