Flexible retirement age will be good for business

The times are a-changing, and with them our attitudes to retirement, which are undergoing a revolution. The carriage clock and the farewell party after 25 years of loyal service now seem as dated as using an electric typewriter.

A combination of more flexibility in the workplace and less rigid career expectations mean a sharp rise in the number of people expecting retirement to be a matter of individual choice, not a decision imposed on them.

These changes have brought the issue of forced retirement to the fore, with employers taking notice and thinking how to respond to this shift. Last week’s opinion by the European Court of Justice’s advocate-general in the Heyday case that the UK’s retirement regulations are not unlawful takes us no further on the issue of default retirement.

Members of the Employers Forum on Age (EFA), which include some of the UK’s top companies, are working to improve the way employees are managed towards the end of their working lives. Removing the default retirement age of 65 is an important step to achieving this.

Naturally, there are many concerns about what it will actually mean to employers. Some fear losing a working practice that exposes them to open-ended costs. Alternatively, retirement may have been seen as an easy way to deal with poor performance. Without an automatic retirement date, difficult performance management conversations may have to be held.

A common concern is that removing the default retirement age will hamper the employer’s ability to manage the flow of new employees and staffing levels. Those of our members who already operate without a compulsory retirement age find the reverse to be true. They say that engaging with older workers and motivating them to stay in the workplace actually helps to fill skills gaps and provides them with a more diverse workforce that better connects with their customer base.

Removing the default retirement age signifies a major shift in the way many organisations run their businesses, but this shift brings positives to the employer as well as the employee. Forward-thinking employers are addressing this issue by improving flexibility and work-life balance policies. Many believe this is key to ensuring employees are prepared to stay on longer.

There is no evidence to suggest that age directly affects performance. Workers of all ages need good management and relevant training opportunities. Physical capabilities do change as we grow older, and some jobs may become harder. But, with the right management, an older worker who doesn’t want to retire can become a valuable asset in a different role with their knowledge and experience retained within the organisation.

Enlightened employers are already developing policies which allow staff to continue working for as long as they want, and are able to do the job. In practice, well-designed and effective performance management systems will put to rest most concerns about operating without a default retirement age.

It’s not just employers’ attitudes that need to change – the fiscal reality is that the UK economy can no longer afford a culture of early retirement. Many individuals can no longer afford to retire in their 60s many will have one third of their lives ahead of them as they collect their first pension cheque. People are healthier, are living longer and the workplace is much less physically demanding. Lifestyles have changed, people have children later and aged 65 they may still be putting children though university or paying off a mortgage.

Flexibility in retirement age is an exciting opportunity. The Employers Forum on Age (EFA) is not talking about forcing people to work to their dying day, but about giving individuals choice about when they retire. With the right approach enforced retirement will one day be a distant memory. The EFA has asked the government to commit now to scrapping the default retirement age in 2011 – rather than merely reviewing it – thereby giving employers time to prepare for the changes.

Personnel Today is supporting the Employers Forum on Age’s campaign to ditch the default retirement age. Read the report ‘The business case for managing without a retirement age’.

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