A news release about the MetLife Emerging Retirement Model Study said when employers were asked which of two retirement-related issues – delayed retirement or the knowledge drain – are of greatest concern, 74% said they are primarily concerned about experiencing a knowledge drain as older workers retire.
Some 26% said they are primarily concerned about the general impact on their overall workforce as older employees delay retirement. The results are similar when employers were asked to look ahead three to five years, MetLife said.
“With the Emerging Retirement Model study, we were surprised to find the extent to which the knowledge drain is both a ‘today’ and ‘tomorrow’ issue for employers, even while conventional wisdom might suggest that the effect of workers now delaying retirement – primarily out of financial necessity – could lessen immediate concerns about the knowledge drain,” said Cynthia Mallett, vice president, Product & Market Strategies, Corporate Benefit Funding, MetLife, in the news release.
While they may stay up late at night worrying about it, few employers have taken steps to curtail or even formally assess the impact of these forces on their organizations. According to the findings, 97% of those employers concerned about the knowledge drain have not yet calculated the cost to transfer knowledge from older to younger employees.
Delayed Retirement Reasons
Turning to the issue of why workers are hanging around longer, 87% of employers who are primarily concerned about the impact of delayed retirement say employees are working longer to rebuild their retirement nest eggs. Other reasons for delayed retirement include: wanting to work long enough to qualify for Social Security benefits (67%), needing income to meet their day-to-day expenses or pay bills (63%), and wanting to maintain medical coverage until they qualify for Medicare (41%).
Meanwhile, 42% of employers concerned about the knowledge drain – and 38% of employers who offer post-retirement benefits – see no connection between post-retirement benefits and an employee’s decision when to retire.
Phase-In to Retirement
Perhaps as a way to ease the transition from full-time work to retirement, more than one-third (35%) of employers are considering implementing, or have already put in place a phased retirement program. Also, half of employers surveyed offer or plan to offer access to pension benefits to partially retired/partially in-service employees, and many employers are implementing flexible work arrangements to accommodate the aging workforce and manage the knowledge drain, MetLife said.
Some 65% of employers say they would welcome additional legislation/regulation that would encourage the implementation of phased retirement programs. Some 71%, for example, strongly or somewhat agree that regulatory complexities and ambiguities involving federal tax and age discrimination laws impact their organization’s ability to offer a phased retirement program.
About half (51%) of employers also strongly or somewhat agree that retirement plan nondiscrimination rules can be an obstacle to an effective phased retirement program for their organization, MetLife found.
From August through September 2009, MetLife commissioned Asset International, the parent company of PLANSPONSOR, to conduct online surveys with 240 employers from companies with at least 1,000 employees. A copy of the study report is available here.