How employers can help employees nearing retirement age

Your employees can start their retirement planning at any stage, but as they near retirement age, decisions about their future become more of a priority. Helping your team prepare for this transition makes the process less stressful for everyone. A clear strategy to support employees as they prepare to retire can bring other benefits.

Open conversations about retirement benefits help create a positive company culture where employees can share their plans. It shows all your workers, including those in younger age groups, that you value your staff and care about their well-being even when they're no longer employees. This can improve employee engagement and staff retention generally. It could also encourage existing staff to stay at work longer, take partial retirement, or return to mentor others so your business still benefits from their expertise.

While many employers used to have a default retirement age of 65, this is no longer true. Some roles, such as the fire service, still have a statutory age limit. You can also insist an employee retires if they cannot meet the physical demands of their role. Otherwise, they can work for as long as they're able, and many do; recent statistics show that the number of people who continue working over 65 has increased to record levels in 2022.

The support your employees need as they near retirement age will vary with each employee. For some, retirement planning will involve working out when they can afford to retire and still cover their monthly bills. Others may aim for a pension fund that lets them travel the world or support their children and grandchildren.

In many cases, individual employees' retirement plans will depend on their health and well-being. They may have hoped for an active retirement but find themselves dealing with age-related health issues instead.

Retirement is also a significant social transition. Workers who have spent around 40 hours a week in the workplace for most of their adult lives suddenly have lots of free time to fill. Leaving work can also mean a loss of their social life and a reduction in status, particularly if their peers are still working.

When developing a strategy to decide what support you can provide your team as they near retirement age, it's a good idea to consider each of these elements.

Talk to your team

As we've mentioned, each individual employee will likely have a vision for retirement, which will change as they approach retirement age. They may want to choose between a full or partial retirement to ease the transition, have specific financial goals or have a view on whether they want to retire early or keep working beyond the standard retirement age.

Ongoing open conversations about retirement benefits help your employees understand their options. However, starting discussions about their needs is vital, as this can help you plan for the future. For example, if a 52-year-old employee plans to take early retirement in two years' time, advance notice will help you prepare. You might want to start training existing staff to prepare them for promotion or consider what skills you'll need in a new employee.

Of course, your employees may not know what they want from their retirement. In that case, consider signposting them to the Midlife MOT, a Government service that helps staff consider their long-term goals and offers support services to help. Its target audience is people in the 45-65 age group, but anyone can use it, and your employees can return to it as their retirement planning goals change.

Discussions about retirement must not place undue pressure on employees to retire, as this could represent constructive dismissal or age discrimination. Before beginning any conversations, it's a good idea to seek legal advice and consult your HR teams.

Pensions

All UK employers are legally required to provide a workplace pension to supplement the state pension. The level of pension contributions you put into your workplace scheme is up to you, and it's wise to speak with your accountants and financial advisers to set your budget and consider the tax implications.

A 2022 survey by HR and payroll software company Ciphr found that matching employees' pension contributions placed third on the most highly valued employee benefits. It's a tangible commitment to your employees' well-being in retirement and can help to make your business an employer of choice.

Providing clear information and guidance to employees about workplace pension benefits helps them with retirement planning. It's also worth providing resources to help them discover when they'll receive their state pension. The state pension age has risen for most and varies depending on age. Employees in their late 40s can expect to receive their state pension at 67, while a 20-year-old university student can expect to wait until they are 68. Your workers can use this calculator to determine what date applies to them.

Financial planning

Generous pension benefits can help to support your employees in retirement, but their retirement planning will vary depending on their circumstances and goals. Your pension providers will likely offer advice to help your employees plan. Still, it can also be worth encouraging your workers to seek financial advice to consider other sources of income. Research by WEALTH at work found that economic factors and the current cost of living crisis caused 33% of working adults to question whether they'll ever be able to retire fully, while 83% plan to continue working for longer to cover cost increases.

Providing staff with access to financial planning resources and information can help them to consider their options. Some may be concerned about the effect of the cost of living crisis. In contrast, others might wonder whether to withdraw some tax-free cash from their pension benefits and take partial retirement before taking full retirement and claim their full pension payments later. The best course of action will depend on their circumstances and tax position. If you invest in health insurance with an Employee Assistance Program for your team, this can signpost employees to financial planning support and resources.

Provide social support

Your employees likely spend most of their working hours with their colleagues, particularly if you all work in the same premises rather than working remotely. When employees retire, they switch to spending most of their time at home, which can lead to social isolation. They can also experience a loss of social status as they leave their career behind.

Helping employees prepare for the social changes that retirement brings protects their mental well-being and also has physical health benefits. Setting up activity sessions and shared interest groups in the workplace helps employees discover new interests which they can continue into retirement. You could also consider organising talks or providing information about local organisations or activities. This benefits those approaching retirement and helps younger employees make the most of their free time. If you have a larger business with branches across the UK, consider setting up a support network similar to the Civil Service Retirement Fellowship, which provides a befriending service, telephone helplines and activities such as a monthly book group for retired civil servants.

Phased retirement

Phased retirement can allow older workers to adjust to life in retirement and give you longer to recruit and train new talent to replace them. A phased retirement can take several forms depending on your employees' preferences and your business needs. For example, they might reduce their working hours by coming into the office daily but working fewer hours. Alternatively, they might prefer to have one or two days away from work and gradually reduce their working days over time. You could also take a flexible approach by enabling staff to combine days in the office with working from home and gradually shifting the balance between the two.

A phased retirement approach lets employees explore life outside work and discover new hobbies and interests. If they change their working hours to avoid commuting during rush hour, it can help reduce stress.

If you decide to offer phased retirement, it's vital that you seek advice from HR and your legal representatives to avoid age discrimination or unfair dismissal, which could leave your business exposed to an employment tribunal claim.

Flexible working

We've already mentioned the possibility of offering phased retirement with a flexible approach to working hours and location. Flexible working is a highly valued benefit for employees in any age group but can be particularly attractive to older workers approaching retirement.

Phased retirement typically involves flexible work, which adjusts over time and ends with full retirement. However, changing employees' working hours lets them take partial retirement without the phased element. For example, an employee may decide to stay in employment but no longer want to work full-time. You can offer them a permanent reduction in their working hours or the option to work from home until they're ready for full retirement. Equally, offering flexible options could help you attract experienced workers back into employment.

In the second quarter of 2022, the number of employees over 65 reached a record 1.468 million. Analysis showed that this increase came mainly from part-time work, especially in industries with high numbers of casual workers, such as hospitality and entertainment. This suggests that part-time or flexible options are more attractive to older workers.

Health insurance

Private health insurance benefits employees of all ages by providing fast access to private medical care. Your business also benefits from reduced absenteeism and improved employee engagement.

We've mentioned the benefits of an Employee Assistance Program (EAP), which can offer telephone support for various issues. Most EAPs provide access to counselling and can signpost employees to other sources of mental health support. Some also offer legal and financial helplines to guide employees to financial planning advice and help with common legal issues. You can arrange a standalone EAP, but most business health insurance policies let you add one to your policy.

While your employees' health coverage ends when they retire, most insurance companies let them switch to an individual policy that they fund themselves. These can potentially be cheaper than taking out a new policy in retirement as they'll already have a claims history and potentially a no-claims discount from their work policy.

Here are some other ways health insurance can help you support employees as they approach retirement.

Workplace wellness initiatives

Workplace wellness initiatives promote healthy living, and you can tailor them to suit your team. You can design a wellness initiative based on common health risks in your industry or sickness absence data. However, most employee health insurance policies include general health assessments that give employees detailed information on their overall health and any causes for concern. These also offer ongoing support to help workers achieve their health goals.

Your insurers can provide anonymised data showing health trends and any prevalent health concerns amongst your team. Many insurers support employers in developing tailored wellness programs based on the data. They can also advise on initiatives that benefit older workers by addressing their health needs and introducing new activities they can continue into retirement.

Online resources

Most health insurance companies provide online resources to help you and your employees learn more about common health issues and ways to improve their well-being. These resources can include calculators to help them assess their help, articles with general information and self-help guidance.

These resources are often available to non-members, so you can signpost your staff to helpful information even if you have yet to invest in health insurance. It also means retired employees can continue to use them after retirement.

One of the best things about online resources is that your staff can access them as needed and explore any health topics they choose. These resources can provide self-help and ensure employees understand when to seek medical advice or treatment.

Menopause support

Menopause typically begins between 45 and 55, although it can be younger. Currently, 4.6 million women aged between 50 and 64 are employed in the UK. Menopause symptoms can be physical or psychological and can affect women's ability to work effectively. A Government inquiry found that three in five menopausal women had symptoms which affected their ability to work, with around 900,000 leaving the workforce altogether. While most women experience menopause before retirement age, there can be ongoing symptoms which impact the rest of their working life.

The Menopause in the Workplace Resources Hub provides guidance to help businesses support menopausal employees.

Employee health insurance can also offer support. Menopause is a natural process rather than an acute illness, so health insurance doesn't cover treatment such as HRT. However, it can provide a diagnosis and offer mental health support and well-being guidance. Your employees can also seek advice from a virtual GP or health helpline.

Some insurers offer access to menopause support apps and forums where employees can track their symptoms and speak to others experiencing menopause.

At Globacare, we help our clients find the best insurance products to support their teams and help their businesses grow. Contact us today, and we'll provide you with tailored advice and guidance.

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