Increasing retirement age – how can employers plan?
The Department for Work and Pensions has nnounced that around six million people born between 1970 and 1977 would see their state pension age increased from 67 to 68 but what are the implications for employers in this decision? This change means that employees will now spend two years at work for every one year in retirement so someone who joins a company at 55 could easily be with the firm for 10 to 15 years. The idea that someone is too old to be worth training will soon seem to be completely outmoded and organisations which are good at recruiting, retaining and retraining older workers are likely to benefit.
Employers also need to consider the changing nature of pension provision. In the past, a final salary pension scheme meant both that people could afford to retire relatively early and that, where necessary, the pension scheme could be used to ease people out. But now many businesses will have employees who cannot yet draw a state pension and who cannot afford to retire on the private pension pot which they hold. Providing high-quality pensions to make sure older workers can actually afford to leave the organisation at a time that works for the employer and the employee is going to become increasingly important.
Being able to retire at 55 on a company pension and enjoying a life of leisure is becoming less likely. Increasing state pension ages, declining levels of pensions’ saving and a dwindling supply of younger workers means that organisations which give some serious thought to their older workforce will benefit.