As people work longer than ever, Helen Swire asks what the impact will be on the workforce overall – and how employers can look after their older staff
Earlier this year, the government launched the Fuller Working Lives report as part of a long-term strategy to encourage us to work longer: to ‘ensure [employers] are not writing people off once they reach a certain age, helping to build a country that works for everyone’.
With estimates that by mid-2030s more than half of Britain’s adult population will be above the age of 50, ministers have set out a strategy to support older workers, recruit older talent, and retain them in the workforce.
At the report’s launch in February, secretary of state for work and pensions Damian Green said: “Most people are healthier for longer and so are able to extend their careers and take up new opportunities. Staying in work for a few more years can make a significant difference, not only to someone’s income but also their physical and mental health.
“I urge all businesses to reassess the value of older workers. Nobody should write off hiring someone due to their age, and it’s unacceptable that some older people are overlooked for roles they would suit completely.”
All of which is very noble, and indeed the 2011 abolition of the default retirement age also supports the aspirations of older generations who might risk being ‘managed out’ of the workplace into retirement.
However, while this may open new doors for older workers, there are also attendant dangers with a rapidly ageing workforce. Russ Piper, chief executive of Sovereign Health Care, says: “With life expectancy increasing a number of people will either work longer than they’d originally planned or return to the workplace post-retirement – hence the importance of understanding the trends and making an informed choice.
“Staying active and healthy is so important and there’s a danger that if disposable income is limited then health insurance may not seem affordable, and with people living longer there are likely to be more unpaid caring roles being taken on by partners and older children.”
So how can employers look after the oldest members of their workforce? And how can they make sure that these workers can afford to retire at an appropriate time?
“One issue is that there is still a degree of age bias,” says Dominic Howard, director, European sales and accounts at Best Doctors. “People talk about trying to reduce that, but it seems that managers expect younger people to be more dynamic, have more ideas and be more receptive to change, and so training is often denied to older people.”
According to research from GRiD, a quarter (24%) of employers have introduced flexible working initiatives to support older staff, 11% have introduced job sharing and 10% have modified roles and procedures to accommodate older workers’ needs.
However, far more can be done to make older staff feel part of the workforce rather than an unnecessary appendage.
Peer-to-peer training and development, whereby employees of all ages within a workplace share knowledge and learn from each other, can prove an invaluable exercise in keeping older staff up to date with new skillsets, ideas and innovations. It is also important to ensure that, in turn, the knowledge and expertise of experienced workers is passed on to the new generations before they retire.
Employers want – and need – to keep the skills of their older generations: but they also need to consider what will happen when they leave. In involving them in shared learning and training, they are both valuing them as employees and showing the value of the time investment in them over the years.
But while it may be a challenge to ensure you are involving the older members of staff, a far greater issue is that of keeping them healthy and making sure the overall environment caters to their needs.
“The fact is we have an ageing workforce and that life expectancy is rising – but the healthy age expectancy isn’t necessarily keeping pace,” says Howard. “From a clinical perspective, you start to see issues as people begin to decline.”
Physical conditions particularly affecting the ageing UK workforce now include musculoskeletal disorders, such as spinal conditions, lower back pain and knee problems while, according to research by the College of Optometrists, 98% of over-50s require corrective eyewear.
Beyond these perhaps ‘obvious’ problems associated with ageing, however, there is a growing concern among employers about cognitive impairments, such as dementia, Alzheimer’s and Parkinson’s Disease.
There is no ‘easy’ solution for employers – and the solutions that do present themselves are not always cheap.
Howard says: “Employers are becoming increasingly aware of a duty of care: they’ve got to be able to extend that to workers of different demographics and address all needs. They will also be challenged by the fact that the more older people they have in the organisation, the more the knock-on effect on premiums in terms of, for example, private medical insurance.”
However, there are plenty of options available to employers looking to support the health needs of their older workers, ranging from PMI, health cash plans and employee assistance programmes (EAPs) to leisure incentives and fitness activities.
“One of the things that can be beneficial to an older workforce would be to have education and training on living a better lifestyle: anything from brain tests through to nutritional advice,” Howard suggests. “And while dementia isn’t reversible, it can be managed more effectively with the right recommendations. Having a service to point people in the right direction in terms of care management is really important.”
Employers must accept the reality: that they will be taking on – or keeping on – older people who will be susceptible to certain conditions, whether physical or mental: and they will need to address that one way or another.
Staying financially stable
Looking after your workers while they work for you is one thing: looking after their futures is another. But it’s a responsibility employers are going to have to take on in the wake of pensions freedom and choice reforms and the lack of a default retirement age.
The Fuller Working Lives strategy points out that ‘by delaying retirement until 65 instead of 55 someone with average earnings could have £280,000 extra income and might increase their pension pot by 55%’.
It’s not always a matter of choice: with a lack of financial awareness of either what they have saved, or of what they will need for a suitable retirement, many people are finding they actually can’t afford to retire.
A record three quarters (73%) of UK employees will work past the age of 65, according to new research from Canada Life Group Insurance, with more than a third (37%) of those thinking that they will be older than 70 when they retire.
The research showed that more than a third (36%) say their pension will not be sufficient for their needs, so they will have to continue earning a wage.
Sovereign Health Care’s Piper points out that “with the pensionable age set to rise again, the average age of many workforces will keep on rising: there is no getting away from it. People in their 20s are already being warned they could be working past their 70th birthday.”
As well as this being a negative issue for the individual, the employer also has to ask some serious questions.
“Are they still able to do their job, and are they going to be as efficient in their role?” asks Andrew Pennie, marketing director at Intelligent Pensions. “And if the employer doesn’t really know when people are going to retire, how do they create a succession plan?”
‘Plan’ is the key word here. Regardless of when they think employees should start to make decisions around their pension savings, experts across the pensions industry are unanimous in the view that people need to plan for their retirement – and their employers need to help them.
“It would be great if people had a better understanding of when they can afford to retire, so both they and the employer know what they’re aiming for,” says Pennie.
“Ideally people would be looking at it a minimum of five years before they’re looking to retire, which would give them an idea of whether that plan is achievable.”
Of course, Pennie acknowledges, part of the issue with achieving a stable plan is the general inertia around engaging with pensions: and with the huge amount of information being thrown at the average employee in the wake of the freedom and choice reforms, there is no wonder there is confusion and a lack of decision-making.
And while an employer may know what a member of staff has in their workplace pension pot and when that person is hoping to retire, they don’t know about their other finances or investments, what that person hopes to achieve in retirement, or what their health is like.
These are all huge factors that have an impact on how and when someone can afford to retire. This is where expert financial guidance and advice comes into play – without it, there is only really half a picture to work with.
“If employers don’t put adequate support in place, they’ll never really have a true understanding of when their employee is going to retire, which makes resource planning very difficult,” warns Pennie. “A support network can create a safe transition into the retirement world, which is lacking at the moment.”
The government’s Fuller Working Lives report may ostensibly be aimed at giving people more fulfilment from their career until a later age: but for employers the challenges of the ageing workforce are massive – and from keeping them healthy and engaged in work, the duty of care now extends into retirement as well.