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The future of retirement

Employers and pension scheme trustees may have to rethink established concepts in relation to employees’ views on retirement, according to a study commissioned by HSBC.
The Future of Retirement global survey found that 43% of individuals wanted to fund their own retirement either through savings or by working longer, perhaps part-time. And the research revealed that 49% of the world’s employers recognise that older workers are just as productive
and motivated as younger ones, although most employers are slow to utilise the opportunity they present.
“A surprising aspect of the research is how much people need to start ‘doing their own thing’ in terms of pension provision,” says Simon Hazeldine, director of marketing, HSBC Actuaries and Consultants. “The other surprise was the high percentage
of individuals who said they wanted to be able to help themselves by compulsory saving.”
The survey, the largest global study on retirement ever undertaken,
covered 21,000 people and 6,000 companies in 20 countries.
Nearly three-quarters of respondents rejected the idea of a mandatory retirement age, believing that employees should be able to carry on working as long as they are capable of doing the job well.
Reasons for wanting to continue working included the need for money (25% of the sample), to have something meaningful to do with their time (22%) and to keep physically
active (21%).
“One of the key aspects was the need for flexibility – older employees
do want this in terms of their working hours, or the ability to go part-time or take a sabbatical,” says Hazeldine. “That means employers will have to design pension schemes and employee benefits packages to address those needs. However, that may increasingly be backed by legislation -- for example, the UK’s Finance Act 2005 which took effect in April allows pension schemes to pay a portion of benefits to the employee while they go part-time.”
In fact, the employees in the survey indicated they wanted more flexible
employment practices to help them continue working past the traditional retirement age, including the ability to guide younger workers (39%), the opportunity to learn new skills, and the opportunity to work fewer hours (both 32%).
Meanwhile, the research found that 53% of employers believe that older workers are not only more reliable
than younger workers, but also just as productive and motivated (49% and 45% respectively).
“A trend is emerging showing that employers are beginning to value older people,” says Hazeldine. “The demographics show there’s not going to be a constant flow of younger people to fill positions – so companies will need more older people in order to protect the corporate DNA. Furthermore, older employees tend to be more loyal – there is a saying that if you’re training
someone under 35, you’re training
them for a competitor.”
He says: “In order for employers to gain an advantage from older workers,
they will have to be sympathetic to their needs at retirement.”
In addition to countries such as the US, Japan, China and Brazil, the survey
covered five European countries: the UK, France, Germany, Sweden and Poland.
The survey found that the British, French and Germans are among the most likely to say that the government
should enforce more private savings, while many Swedes and Polish employees consider that the government should bear most of their retirement costs.
Meanwhile, according to the survey, French employers are among the least active at recruiting employees over the age of 50, and do the least to retain older workers. Similarly, Polish companies are more likely than in many other countries to encourage full early retirement, while less than half actively encourage
older employees to continue working.
In contrast, the survey says that UK and Swedish employers are among the best for recognising the value of older workers and offering them flexible employment practices, although almost half of Swedish employers enforce a mandatory retirement age.
German employers expect their employees to retire slightly later than in most other countries, and German companies actively try to retain older skilled workers.
“The pressures of an ageing population
are similar for all European countries – for instance, Italy is affected by an extremely low birthrate,”
says Hazeldine. “However, there seems to be a greater recognition
by UK employers in terms of valuing an older workforce, perhaps because they have moved further in the debate than other European countries.”
And he says that Europe is not alone: “The surprising thing is that while people seem to think the demographics of an ageing population
only apply to Europe, we also see the same pressures in emerging economies.”

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