Companies have been aware of the ageing population within their workforce for a number of years, though now it is thought that up to 27 per cent of the UK workforce is over 50 years-old.
This is a significant issue for employers who not only have a large number of employees reaching retirement age, but few are financially or mentally prepared for what this will mean; particularly in lieu of the introduction of auto-enrolment.
How has auto-enrolment affected attitudes towards pensions?
Pensions auto-enrolment, introduced in October 2012, was designed to give employees more knowledge regarding their pensions, and the responsibility they need to take for their retirement income including paying the required minimum of 1 percent of salary into their pension. However, many employees regard this minimum as a substantial enough contribution to their pension pot to give them the security they need for retirement; when in fact their input should be closer to 10 per cent if employees are to live comfortably in a potentially lengthy retirement.
Jo Thresher, head of money at work at Benefits Consultancy Jelf Group said:
“It’s about employers educating employees that [the minimum contribution of] 1% isn’t enough, and just because they’ve been put in a pension scheme doesn’t mean they’ve got a pension; it probably means they’ve got a pot of money that’s not worth very much.”
For those employers whose budgets can stretch to accommodate the added cost, benefits packages often include an attractive pension plan. However, it is not always possible for an employer’s contribution to be increased, in such an instance an employer could consider educating their employees regarding their pension input and their futures.
Employers can help employees prepare for the future financially as well as support those who may want to continue working past retirement age. Many employees enjoy their work or have been working full-time for their entire adult life, and therefore the idea of leaving their role and heading straight into a life of leisure may come as a shock to the system.
This has led to many companies introducing phasing out periods that allow older employees to work fewer days a week rather than stop working altogether. Similarly, HR departments can support employees by providing information about local volunteering opportunities, that will help the retiree build new meaningful relationships outside of the work place as well as taking part in a meaningful role within in society.
David Sinclair, assistant director, policy and communications at the International Longevity Centre believes that as the work force continues to age and fewer people are choosing to retire at the default retirement age (DRA), many employers will begin to take advantage of their experience and knowledge. He said: “If an employer’s most promising employee is 68, a rational organisation has to make the most the of that person’s skills… employment should be about ability, not age.
“Getting rid of the DRA means employers have to start doing performance reviews properly and become a lot more age neutral… This creates huge challenges in terms of skilling-up managers to manage people a lot older than them.”
The next step for employers
However, in order for older members of the workforce to remain within their teams, employers must become more educated in the health care issues that could arise including vision and hearing problems or arthritis.
Providing the full level of support may include extending the benefits package for these individuals to encompass additional healthcare benefits such as regular optical check-ups and private dentistry.
This will fall to the compensation and benefits specialists of an HR department to effectively implement these schemes accordingly throughout a company. Similarly, pension analysts will be required to restructure an employee’s pension input, manage when they begin to receive their payments according to the work schedule and whether they are reducing their hours or remaining full time beyond the default retirement age.
At Portfolio CBR we have a vast talent pool of candidates in the compensation, benefits and reward industry whose experience throughout this sector gives them the knowledge and experience needed to create effective benefits packages across your business, including the older population. If you would like to discuss a vacancy with one of our recruitment consultants, and find out more about what we do, please contact us on 020 7650 3190.
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