The UK’s biggest building society has benefited from letting staff draw their pension while continuing to work, since the abolition last year of the default retirement age
The government has launched a two-minute toolkit for employers to understand the regulatory changes, particularly aimed at small-to-medium sized enterprises (SMEs).
It informs them they can now only retire workers if they can objectively justify it.
The guide also calls upon them to tell workers about their options to continue working, and suggest they talk to their pension providers about their financial situation.
It includes further case studies of SMEs which have put in place flexible retirement policies.
Nationwide has retained skilled and engaged staff through letting pensioners continue to work flexibly to support their retirement income.
The building society is one of a number of employers which are using the abolition of the default retirement age to retain skilled workers.
Robert Aldrich, head of HR strategy and operations, said: “Having a mixture of ages brings a richness of different skills and experience."
Flexible retirement presents an option to pension scheme members to support their retirement income at a time when the cost of annuities is at historically high levels.
Rising longevity and the increasing cost of providing pensions is forcing more workers to consider continuing split-shifts, job sharing, part-time and home working.
Building in flexibility
The DRA was abolished in April last year, meaning employers could no longer retire people purely on the basis of age.
Nationwide brought in new policies following the end of the DRA, according to case studies released by the Department for Work and Pensions (DWP).
As long as the performance is there, the full support will be available
These include permitting employees to work while they start to draw their pension and to gradually reduce their work hours.
The building society also maintains contractual medical cover for employees who would previously have been excluded.
Aldrich said: "As long as the performance is there, the full support will be available.”
The building society said its approach means the demographic of its workforce reflects its customers, a quarter of whom are retired.
Construction firm Killby and Gayford, which employs 270 people, also employs staff beyond the age of 65 in order to retain skills in a difficult economic climate.
The company has also benefited from creating a mentoring scheme within the past few years to transfer skills to younger workers.
Gabrielle Williams Hamer, company secretary at Killby and Gayford, said: “A considerable amount of training is required, particularly in our highly skilled construction operations and joinery division.
“We can’t afford to lose expertise – age really does not matter.”
Rules of retirement
DWP research from 2010 demonstrated a lack of “clear understanding” of an employer’s retirement policy led to anxiety among employees.
It’s important older workers have the information they need to make informed decisions about retirement planning and flexible working
For example, equality regulations in 2006 created a formal 'right to request' process for employees, meaning they can ask to work beyond the employer’s compulsory retirement age.
For those respondents to the survey uninformed about their statutory rights, learning about this right was a “pleasant surprise”.
Employees who were categorised as partly informed about their retirement options were anxious about the form this process could take.
The government wants schemes and employers to have regular formal or informal appraisals focusing on retirement planning, and to refer individuals to further help where necessary.
A DWP spokesperson said: “It’s important older workers have the information they need to make informed decisions about retirement planning and flexible working, and can discuss these issues with their employers.
“Where they have a workplace pension, workers should contact their pension scheme to check their options for flexible retirement and the implications of working longer, full-time or flexibly.”
