Embracing the new retirement

With UK workers living and working longer, we are beginning to see many looking for a new type of retirement.

According to a recent survey of workers aged 50 or over, half wanted to gradually wind down to retirement. The survey found 70 per cent of respondents said they wanted to work fewer days each week, and 44 per cent said they wanted to work fewer hours in an individual day. Only 31 per cent said they would rather retire the traditional way.

With declining birth rates and baby boomers exiting the labour market, many employers will have to embrace demand for a new retirement to address the current skills and labour gaps. But employers need to tread carefully both from a legal and cultural perspective when embracing the new retirement.

There are five key areas to consider:

Firstly, care needs to be taken not to adopt a one-size fits all approach. Retirement will still mean different things to different people. Making ageist assumptions about a person’s plans, aspirations or fitness to work is likely to result in claims of direct age discrimination. Moving forward it will be a regular part of any career development conversation for managers to ask about an employee’s short, medium and long term plans.

Secondly, there may be initial reluctance from staff (and employers) to be open about their plans. This can only be addressed by employers offering an alternative to the traditional cliff edge retirement. So it would mean offering different things for different employees. For those in senior management, highly skilled or specialist roles, it could mean looking at phased succession, the terms of which would need to be clear to avoid dispute or either party changing their mind and frustrating the plan. For others, it may be encouraging moves into new roles which suit their skill set or which are capable of being performed part time. For many, it will mean staying in the same role but offering more flexibility in working hours or patterns.

Thirdly, the flexibility an employer can offer older workers is something it is likely to have to also offer others of any age. Restricting certain types of flexibility to only those looking to retire is unlikely to be justified, save in limited circumstances where there is a need to acquire, retain and transfer specialist skills or knowledge.

Fourth, but related to the above, it is unlikely an employer can offer all employees flexibility. Employers will need to put in place processes to ensure decisions are made fairly and equitably, so employees understand why one person has been allowed to work flexibly but another has not. Otherwise, as with many requests for flexible working, this will be an area for internal grievance and external tribunal litigation.

Finally, thought needs to be given to the potential for intergenerational bias or unfairness in the type of flexibility offered. Whilst older workers may be looking to work reduced hours in less demanding positions, younger staff may prefer flexibility as to when and where they work to balance their work/life needs. If an employer only embraces a reduction in working hours, it may be applying a practice which indirectly discriminates against younger workers. Conversely, if it only embraces flexibility in when and where an employee works, it may indirectly discriminate against older workers.

Regardless the message is clear – an ageing workforce requires new career paths, new contracts to govern succession or retirement and a holistic approach to flexibility. It calls for a whole strategy to embrace the new retirement.