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Why traditional retirement is bad for business

Why traditional retirement is bad for business
Sponsored Feature Presented by  Next – Up
Why traditional retirement is bad for business

Victoria Tomlinson CEO of Next- Up

By Victoria Tomlinson CEO of Next- Up

Ageism in the workplace perpetuates the attitude that older people are a liability or that they should be simply written off instead of an asset to be valued and nurtured like younger employees. Yet if we could turn these perceptions on their heads, company leaders could find they have the answer to many business problems under their noses.

Average retirement ages become older

The original concept of retirement came from Germany in 1863. Chancellor Otto von Bismarck introduced retirement to open up opportunities for younger employees. To sweeten the pill, he offered a pension to anyone aged over 65. At that time, hardly anyone lived to 65, so it was an inexpensive plan! However, this does raise the point that, unlike today, employees were utilised well into their senior years.

In 2022, according to UK government figures, the average lifespan is 86 years old for men and 89 for women. Yet society and businesses have not kept pace with these changes. The government pension age is currently 66 years old (rising to 67 by 2028), and many employees are still capable and interested in continuing to work in some capacity beyond this outdated age milestone. 

In the current financial climate, rising inflation and the threat of recession can potentially push the average retirement age back further. For many, a pension may not be sufficient for 20 post-retirement years without any additional income.

What is the value of the older generation?

The popular perception regarding older employees is that when people hit their 50s, they become tired, less capable and possibly burnt out. Yet during the pandemic, we saw first-hand that the older generation is not necessarily anything of the sort. The government called for doctors, nurses, scientists, teachers and business people to come out of retirement and help the country in crisis. There have been no reports of these professionals struggling to meet requirements; in fact, there were stories of medics working 16-hour shifts to keep hospitals working effectively.

The pandemic offers another example of the value of experience. As lockdowns were rolled out, younger generations experienced more stress and anxiety than older generations who had experienced a global crisis before. This may have been the first pandemic in 100 years, but older adults had lived through a recession that wiped businesses out overnight. This exposure to adversity had immeasurable value for supporting younger people, adapting swiftly, and responding with practical strategies.

As employees, the older generation offers many underrated benefits. They tend not to have the same family commitments or childcare restrictions, so they don’t need to take their annual leave during the school holidays. They have the flexibility to provide cover for challenging times of the year when others want to be with younger children. Another value is the networks that people accrue as they go through life. Their black book of contacts and understanding of how the world works is hugely undervalued, including by themselves.

Another value is the ability to build relationships. They know how to create partnerships and good community relations as a generation. Businesses can utilise this to deliver ESG targets, from net zero carbon emissions to recruiting from more diverse pools. The experience required to read situations, offer insights, build relationships and a career’s worth of ethical development would add value to most ESG initiatives.

Transforming ‘traditional’ retirement

Rethinking retirement presents opportunities for older individuals, businesses, and the economy. The current social and working landscape no longer aligns with traditional retirement or the expected lifespan of the millions of 60+ individuals in the UK. 

People may not want to continue full-time employment within their pre-retirement role, but this does not mean they wish to give up work entirely or that they can no longer benefit society. New government research shows that nearly two-thirds of over 50s no longer think that working full time and then stopping work altogether is the best way to retire, and around half of them would still like to be in work between 65 and 70. 

Regarding skills and experience, traditional retirement is a significant waste -especially in the face of a national skills shortage. Pivoting into lower stress (but necessary) work, like corporate social responsibility (CSR) initiatives or mentoring schemes, can retain this experience within businesses whilst matching older employees’ priorities and needs. Once retired, people are keen to do things where they meet people or get out of the house and earn a bit of money so they can travel and have a few luxuries without dipping into their pension pot. So discussing completely new roles could be a win-win for them and their organisations.

Utilising the skills and experience of employees over 50 could be impactful in closing the skills gap and assisting with income generation in later life. A reasonably unknown but critical factor to traditional retirement is the impact on mental and physical health. Older people are less likely to suffer a rapid health decline when they remain active and busy.

How HR departments can support the changing retirement landscape

The default retirement age law was scrapped in 2011, meaning employers can no longer force employees to retire. Some corporate firms still have partnership deeds with a specified retirement age –typically around 60 or 62. However, most firms are worried this could be called out for age discrimination and are looking to rewrite these deeds without a finishing age.

This creates a real challenge for HR heads. How can you put succession planning in place if you don’t know when anyone plans to retire? Apart from the worry of age discrimination, the whole issue of retirement is also deeply sensitive and personal. 

The first step for HR is to give people time and a safe place to start thinking about what they want to do after corporate life. People in their 50s and 60s tend to dread the word ‘retirement’. It feels outdated and dismissive, whereas it should be a time of opportunity. By helping them with the skills to create a new pathway, people move from being apprehensive and daunted by this next phase to becoming excited about possibilities. Our Next-Up workshops focus on changing participants’ mindsets about retirement from anxious to excited.

With a positive mindset, people can begin exploring their options in terms of actions that benefit all parties. Staged retirement (going down to four days, three days and then two days) produces amazing results for employers and employees. Creating this platform for discussion means HR representatives are less likely to hit the current barriers where there are stories of employees bursting into tears, becoming aggressive or just avoiding the discussion altogether. People are then more open to gaining new skills, such as tech, and exploring new experiences that will help them once they have left their employer.

Unfortunately, many of the problems caused by and surrounding retirement are to do with negative attitudes from both employees and employers and a lack of vision when it comes to changing this. As long as we keep discussing the ‘ageing’ workforce in a discriminatory way, we will continue to miss the vast array of opportunities these employees can bring. If employers and wider society can open their minds to the potential of this wasted generation, we could solve many problems in one go.

About Author:

Victoria launched Next-Up to help people find new ways to use their skills in unretirement. Next-Up runs pre-retirement workshops for corporates and professional firms and has an online platform to help all employees pre-retirement (public and private sectors). Next-Up’s podcast, Rethink Retirement, helps people with inspiration and ideas for unretirement. Victoria is chair of Women in Leeds Digital, helping increase the diversity of digital teams in organisations. A former director of EY and on the London management team, she founded and ran an award-winning communication, digital and leadership business Northern Lights PR for 30 years. She is an Amazon bestselling author, a blogger and one of the BBC’s expert women regularly appearing on TV and radio to comment on news. She is an international and TEDx speaker on unretirement, leadership, women on boards and strategic LinkedIn and has coached chief executives and directors and mentor’s start-up businesses, young people, ex-offenders and those transitioning into retirement.

Global Banking & Finance Review


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