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Managing your retirement

Employers are increasingly moving towards greater flexibility for those who are in the years leading up to retirement; whether it is to support those who wish to combine work with other activities, phase their retirement or simply work longer.

Increased life expectancy, better health amongst older people and inadequate pension provision are encouraging more people to work for longer meaning that many work past what was traditionally ‘retirement age’.

Retirement policy

Do you have a specific retirement policy? If not, you may wish to consider introducing one. A carefully thought-out policy not only benefits those approaching this major milestone but can also increase flexibility in staff resourcing. Your policy should spell out your stance on retirement, the procedures you follow for staff who are about to retire, the options available to them, any pre-retirement help or training you provide and any post-retirement arrangements. The issues listed below will help you decide how you wish to manage this process.

No fixed retirement age

For most employers there is no default or normal retirement age which means employees would retire at a time of their choosing by serving either their statutory or contractual notice (whichever is higher).

Notice of retirement

If an employee has indicated a wish to retire but has not given formal notice to terminate the contract, then the employee is entitled to change their mind, and not obliged to retire.

If an employee has given formal notice to retire on a certain date, the employer is under no legal obligation to let the employee withdraw their notice but may allow the employee to do so.

Pre-retirement planning

It can be a huge shock to someone who may have attended the same workplace for many years, to suddenly be faced with not having to do so. Retirees can often feel a sense of loss or feel they are no longer needed. For some, the change from full-time employment to retirement can be a traumatic and disorientating experience. Therefore, the more planning and preparation, the better this can be managed.

To attempt to ease this, you may wish to consider offering the ability to reduce hours over a phased period, prior to retirement. By extending this further, many businesses see the benefits to both sides of using retirement as one way of introducing more flexibility into staff resourcing. Having constructive workplace discussions will assist both employer and employee in determining a best way forward to support this.

Consideration could also be given to the employee taking a less demanding role as part of their pre retirement plan. Although there would be no legal duty on an employer to create a new role specifically for this purpose, it would be part of ongoing discussions which include exploring current vacancies.

A further option of allowing voluntary early retirement during any proposed redundancy programme, can release promotion blockages and help prevent compulsory redundancies; on the other hand the employment of retired staff on occasional or project work may help retain experience and cope with fluctuating workloads.

A policy may therefore proactively encourage an ability to retire and return to the workplace.

It is common at appraisal meetings to ask employees about their future plans, and appraisals are an ideal opportunity to find out at what stage in their lives your employees are intending to retire.

If your employee is considering future retirement, a more flexible approach now may benefit you both, so consider allowing your employee (if they wish) to phase their retirement by gradually reducing their working hours (and pay).

A common way of applying this is to work for four days a week for a few months, reducing to three for a while and so on until only a few hours a week are worked.

This provides the employee with the work-life balance they may have dreamed of for years! It may also allow you to train up a replacement whilst still having the benefit of the experience and it prompts earlier consideration of this and a smoother handover.

If such a working pattern is agreed, do be sure that the employee is aware if this will affect any benefits upon leaving.

Build in regular reviews: after experiencing a reduction in hours, the employee may well decide that full retirement is no longer so attractive and may wish to consider continued part-time working. You get to retain a valuable employee for a while longer, on a part-time or even consultative basis.

Medical advice

It must not be assumed that just because an employee has reached the age in which you may think they should retire, that they no longer have the abilities or fitness to undertake their job.
If there are genuine serious concerns about the employee’s ability or fitness to carry out their role then medical advice must be sought either from an occupational health provider or other medical practitioner. Age should not be used as an indicator of physical abilities.

Retirement counselling and training

Many employee assistance programmes cover preparation for retirement, as do employer support groups, in the form of seminars, short training courses or one to one support for future retirees. Employees’ attitudes towards retirement, the extent to which they need advice and the personal issues involved will vary considerably, therefore ideally employees would be given general information in groups but also offered individual counselling.

Large businesses typically organise pre-retirement courses of 1-3 days, which employees attend some months before expected retirement, often with their partner. Courses may be spread over several days or even weeks, as an alternative to full-time day or weekend courses.

Such courses normally cover all aspects of retirement including:

  • Pensions advice (both occupational and state).
  • Other social security benefits.
  • Personal taxation.
  • Investment (eg of retirement lump sums) and financial planning.
  • Continued provision of employment benefits, eg PMI.
  • Other work opportunities eg self-employment, voluntary work, part-time options.
  • Health and fitness issues, leisure and social activities.
  • Personal relationships (retirement often means that couples have to establish new patterns of relationships at home).
  • Home activities and house maintenance.
  • Writing a will.
  • Caring for elderly dependants and sources of help with this.

Age Friendly Employer Policy

If you require assistance with all things age related in the workplace, including age discrimination, pensions and retirement planning, you can now download our free policy here.

Further Information

For further guidance on this topic please contact us or get in touch with us on 0844 324, 5840 and speak to a member of the team.

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