Employers are feeling the effects of a significant back-up in talent flow, as more senior employees delay retirement, as concerns of affordability from weakened retirement plans and high uncertainty and supplemental retirement income continue to grow from the weakened economy.
While there are some urban myths tied to the employees working deeper into retirement years, such as higher labor and/or health care costs, Arthur Noonan, a senior partner with Mercer says the key take away is know your facts.
As an example, Noonan says one employer client, which had traditionally developed its talent from within the organization, decided to end its defined benefit plan in the late 90s. In changing its retirement plan, the company had noted a significant back up in its talent flow as more and more senior employees began postponing retirement.
And we know what happens when people dont advance, Noonan says. They get frustrated, he says, adding that it could lead to lower productivity and higher turnover in employment.
In addition, he says, other unintended consequences of delayed retirement include promotion blockage. Each delayed requirement could cost an employer five or more jobs, he adds.
As an employer is designing its optimal retirement plan to include on-time retirement, Noonan says employers should ask three questions:
- What is the true cost of delayed/early retirement for the organization?
- What is the value of tenure to the business?
- Is the value of tenure to employees properly aligned with its value to the business?
With strong workforce analytics, you can bring innovative approaches to solution design and implementation, to best serve your organizations business interests, he says.
The design of a plan should also include proper messaging so employees are aware how to reach a healthy retirement savings for an on-time exit, he adds.
Christopher Goldsmith, vice president and client relationship manager at Sibson Consulting, adds that constructing a bridge for employees between life today and life in retirement will be key.
He says plan participants that are focused on the current selves tend to contribute around 4% toward retirement, but employees that were focused on their future selves contributed more than 6%.
The difference in saving can be eating steak and lobster dinners versus bologna sandwiches in your golden years, he notes.
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