Who needs retirement, anyway? Given the yawning chasm in public and private pensions funding, certainly not UK PLC or the state.
We are already in the process of seeing the age of eligibility for state pensions rise incrementally, so that by 2028 the official retirement age for men and women will be 67. Latest policy indications suggest that will rise again by 2039.
And for those of us who are aghast at the idea of having our golden years snatched away and being forced to work well into our dotage, perhaps it is time to think again. There is some evidence to suggest that retirement can be linked to significant deterioration in mental and physical health, and that by working longer, we actually increase our chances of living happily to a ripe old age.
Which is all very well – delaying retirement may well both dig organisations out of a massive financial hole and maintain a sense of purpose for people as they live longer. But has anyone stopped to think of the implications on business of having a significantly older workforce?
The NHS, by far the UK’s largest employer, is certainly taking this seriously. Since 2014, it has been running a Working Longer Group precisely to explore the ‘challenges and opportunities’ of asking health professionals to work longer before retirement. Part of the group’s remit is certainly to look at the administration of the NHS pension scheme, but it is also examining what the impact would be on recruitment, service delivery and, significantly, training.
Keeping skills fresh
The fact is, if we are asking people to spend near enough half a century in the workplace, the environment they start their careers in is inevitably going to be very different to that they leave on retirement. Technologies change, working practices change, expectations change.
For example, those now approaching the state pension age of 65 will have entered the workplace before even computers were the norm, nevermind the internet, mobiles, cloud computing and so on. Over the course of their careers, they have experienced huge changes in technology which have had a profound effect on the way they work. To keep up, they will have been expected to refresh their skills at a significant rate.
And this is where we hit a sticking point. For all organisations may be very keen to have people working longer, they are much less eager to invest in training to empower older workers to keep their skill sets relevant and up to date.
This results in a false economy. Older workers are too often viewed as lacking ‘modern’ skills businesses demand. They are therefore seen as expendable, easily replaced by younger, fresher models. But given recruitment costs, does that approach really make sound financial sense compared to the cost of training?
Through a reluctance to train, employers are not only endangering a key opportunity to get their pension costs under control. They are also wasting a valuable human resource. Across Europe, the average employment level for 55-64 year olds is just 54.5 per cent – nearly half of people in the decade before retirement age are already out of work.
Yet there are examples where older workers play a much more significant role in the labour market. In Sweden, the employment rate for 55-64 year olds is a nudge over 70 per cent. The difference? A much stronger culture of lifelong learning, where employers are prepared to invest in workers as a key resource over the long term, making sure their skill sets keep up to date with the needs and expectations of the business.
Change and evolution is a natural part of business – no one succeeds by standing still. But if you want to adapt and improve, you have to be prepared to invest in your people so they can deliver the improvements. As with any asset, the key question businesses face is this – does it always make sense to throw out what you already have and start over from scratch?
Or would you be better served building and developing the experienced, knowledgeable workforce you already have to prepare them for new challenges?