Retirement used to be a topic openly discussed between employers and employees. Today, those conversations are disappearing, and that’s a problem. While legislation and social attitudes have contributed to this shift, avoiding the subject can create challenges for both employees and organisations. It’s time to rethink how we approach retirement planning.
 

Why retirement conversations are disappearing 

It was previously quite common for employees to be approached as much as five years before their “official” retirement age and asked about their intentions for working and retiring. A plan that often included a transition or phasing into retirement often resulted. 

However, a number of external developments appear to have discouraged employers from continuing this approach: anti-discrimination legislation has made it unlawful to set compulsory retirement ages for employees or to engage in conduct designed to cause an employee to retire because of their age. 

Age discrimination legislation has also made employers more cautious. Raising the issue of possible retirement could be perceived as placing pressure on employees to retire when they don’t want to. 

The “official” retirement age (for pension entitlement purposes) is increasing, in response to community and government pressures to keep employees in the workforce for longer. This pressure comes from both budgetary reasons and the need to cope with workforce demographic trends. 

Overall, employees’ life spans and health are improving, both of which encourage many of them to keep working for longer. 
 

The consequences of not having conversations 

The result of the above factors is that conversations about retirement intentions often do not occur unless an employee initiates them. Many employees are either reluctant to do this or do not know how to proceed. 

The following can be the consequences: 

  • Employees are unaware of options that may be available to them, such as flexible work arrangements and transition-to-retirement plans. 

  • Employers may lose valuable employees sooner than they need to. 

  • Workforce and succession planning are harder for employers because they do not know employees’ intentions and preferences and have less information to plan with. In organisations with a high proportion of mature-age employees, this is particularly difficult because they are at risk of losing many employees in a short period with little prior notice. They may have to rely on guesswork and percentage estimates. 

An overall trend is that the concept of retirement is gradually disappearing, and leaving the workforce is being lumped into the category of resignations. 
 

What Drives Retirement Decisions?

A combination of factors influences employees’ decisions about when to retire: 

  • financial position 

  • pension and other superannuation entitlements 

  • health status 

  • carer’s responsibilities 

  • other interests, e.g. travel, further education, volunteer work 

  • availability of various flexible work arrangements. 


Keep having the conversations 

It is not unlawful to ask employees what their plans for the future are and discuss how or whether they can be accommodated at the workplace. It is recommended practice to have similar discussions with all employees about their plans and aspirations, regardless of age. 

It may be unlawful discrimination on the grounds of age only if the information obtained is used to disadvantage the employee in some way, e.g. to force the employee to retire, or overlook them for promotion, or if the employee is pressured to make a particular decision, e.g. to retire earlier than preferred. 

The discussions can be included in other conversations with the employee, e.g., performance reviews or general “catch-up” meetings. 

Because perceptions of discrimination still sometimes exist, the recommended practice is to train managers and HR practitioners in how to raise and discuss the issues with employees. 


Strategies for managing mature-age employees 

Organisations are under pressure to retain mature-age employees in the workforce for longer, e.g., to avoid losing corporate knowledge/expertise and to counter demographic trends. Still, they must also accept that some employees will choose to retire at particular times, and many prefer some sort of transition or phased-in process. 

Therefore, strategies for managing mature age employees should have two elements: they should both seek to retain employees in work but also assist them to retire if that’s what they want. Too many strategies focus mainly on the latter and overlook the former, for example, financial planning assistance that emphasises planning for retirement ahead of work/life balance. 

Advice to employees should cover the potential benefits and drawbacks of both options. For example, continuing to work can have benefits for the psychological well-being of many employees (e.g. a sense of “belonging” and continuing to make a valuable contribution), although it may not be obvious at the time and even if an employee doesn’t actually need (e.g. financially) to work. 

A wide range of flexible working arrangements should be available to employees, e.g. part-time work, casual work, consulting roles, compressed working week, purchased leave, career breaks, flexible start/finish times and working from home. Again, they should have a dual aim, both to retain employees in at least some capacity and to assist them to phase into eventual retirement. 

Another critical step is to review all employment policies and practices to ensure that none directly or indirectly discriminate against mature-age employees, and that none provide a disincentive to continue working beyond a certain age (e.g., superannuation entitlements).