Ageing workforce requires greater flexibility from employers

Rising longevity is changing the terrain of later life employment and retirement benefit, forcing employers to pay closer attention to succession planning.

Speaking at the National Association of Pension Funds annual conference in Manchester today, Carole Jagger, Axa professor of Epidemiology of Ageing at Newcastle University, said declining health in later life, regional inequalities for healthy life expectancy and the rising proportion of over-85s in the population were particularly concerning as working life extends deeper into old age.

The days of working to a certain point, stopping and never working again [are] on the way out

Steve Robson, United Utilities

According to Jagger, cognitive life expectancy has increased over the past 20 years but the longer-term outlook for living to an old age free of disability is bleak, and subject to extreme regional inequalities.

Jagger said 73 per cent of local authorities in England have an average healthy life expectancy below aged 65.

However, in the northeast this figure rises to 100 per cent for all local authorities, 87 per cent of those in the northwest and 93 per cent in Yorkshire and the Humber.

“It’s going to be much harder to work longer in those areas - it’s going to be harder for employers, it’s going to be harder for employees,” she said.

Role of the employer

In order to manage an ageing workforce and succession planning effectively Steve Robson, head of pensions at FTSE 100 company United Utilities, said employers need to engage their workforce with new pension freedoms and offer flexible working hours.

The challenges of succession planning are particularly pertinent to United Utilities – which provides water to the northwest regions of the country – due to the manual nature of many of the jobs.

“The days of working to a certain point, stopping and never working again [are] on the way out,” he said.

“Over the next few years [flexibilities] will become increasingly used as people realise they can change and flex their hours and income at the same time.”

Robson said he has become increasingly involved with company workforce management discussions, a debate previously held away from the pensions domain.

“Pensions used to sit to one side of that, we dealt with people who retired and looked after the pension scheme,” said Robson.

“Suddenly I’m a part of that along with the recruitment team… and policy people, because you don’t know when people are retiring and when you need to bring people in to train them up.”

Joining up policy

Robson said the company has put a lot of work into its response to the changing demographic of the workforce and has joined up its company policy across recruitment, flexible working and retirement benefits.

“Do you want to provide people with enough income so they can retire and help things work through?” he said.

“If you don’t have a policy on how [people] can take their money, everybody may start to spend [it] at 55 and then get to 60-plus, not have enough to retire and carry on working.”

Eight in 10 delegates attending the session said they have considered the challenges of an ageing workforce but have not yet pushed through changes to employees’ work and retirement benefits packages, according to a poll cast prior to the discussion. 

Kirsty Bartlett, partner at law firm Squire Patton Boggs said employers must prepare their workforce for the financial realities of living and working longer.

“The reality is that over 30 per cent of the workforce is already 50 or above,” she said. “Long term social care… that’s the elephant in the room.”

“People trust their employers an awful lot more than the financial services industry so employers have a critical role to play here – it comes down to paying contributions.”