According to a Hewitt Associates news release, its survey of more than 140 mid-size and large employers revealed more than half (55%) have already evaluated the impact potential retirements could have, and 61% say they have developed or will develop special programs to retain targeted, near-retirement employees.
While only 21% say phased retirement is critical to their human resources strategy today, that number nearly triples (61%) when employers look ahead five years. Almost half (47%) have some type of phased retirement arrangement available to employees, but only 5% have formalized those arrangements. However, 40% expressed an interest in establishing a formal phased retirement program in the future.
According to the news release, almost three-quarters of employers (72%) say retaining the experience, knowledge, and skills of older workers was the most important benefit to them in offering phased retirement programs. Other key employer benefits cited include easing the difficulty of replacing key skills (52%) and helping with transfer of key skills from experienced to inexperienced workers (50%).
A majority of employers (86%) say one of the largest benefits of a phased retirement program for near-retirement employees was the ability to gradually transition from the active workforce to retirement. Other benefits for workers cited include providing additional income to supplement their retirement income sources (67%) and/or providing workers with access to employer-subsidized health care (60%).
The looming wave of retirements has caused employers to take a number of steps to better understand how phased retirement programs can be structured as effective talent retention tools. In particular, employers are increasing efforts to obtain information about employees nearing retirement eligibility.
Of those companies that have begun gathering information, almost two-thirds (63%) use general industry research and discussions with key business leaders and managers as a way to gather information on phased retirement programs. Slightly less than one-quarter (22%) currently gather formal input from near-retirement employees, but that number is expected to more than double to 54% in the next few years. In addition, Hewitt said, while less than 30% of companies currently look at diversity data, 41% say they are likely to do so in the future.
Almost two-thirds (65%) of employers surveyed have determined that offering part-time employment (on a year-round basis) is one of the most effective ways of retaining near-retirement workers, and 37% of employers say giving near-retirement employees access to retirement benefits would be effective in retaining talent.
Employers are also reconsidering their policy on rehiring employees. Forty-six percent say they are likely to review their rehiring policies in the future.
Challenges to adopting or expanding phased retirement arrangements cited by survey respondents include:
- Belief that there are significant legal and regulatory barriers (52%),
- Company culture (42%),
- Lack of support from senior leadership (25%),
- Manager resistance (20%),
- Concerns about costs (34%) and
- Fear that phased retirement programs might accelerate the loss of talent (30%).
Of the companies that already have phased retirement arrangements in place, about one third (32%) say they are satisfied with their programs. Just 14% of companies said they actually measure the success of their programs, and 70% say they have no measures in place and no plans to implement a measurement strategy in the future.
Factors in determining the success of phased retirement programs cited by respondents include:
- retention of skills, knowledge and/or experience (92%),
- employees' desire to gradually transition into retirement (75%), and
- employees' ability to qualify for health care benefits (49%).