The Office for National Statistics anticipates that in 50 years’ time, the population of people aged 65 years and over in the UK will increase by 8.6 million.
A gradual decline in birth rates and greater health in older age means that in a number of years there could be a skills gap across all sectors, as more people retire than enter the workforce.
The retirement age is already creeping up to make full use of those who still have valuable knowledge, skills and experience to offer, while buying the Government more time to figure out how they’re going to fund the state pension. It is predicted that the age of retirement will reach 67 between 2026 and 2028 and 68 between 2044 and 2046.
But what should employers take into account to prepare for this profound demographic shift?
Training
There are strict legal obligations laid down by The Equality Act 2010 which prevent age and disability discrimination. The assumption that those aged 65 and over are illiterate in terms of technology, for example, is discriminatory. So is offering training only to those within a certain age bracket for fear of not getting return on investment.
However, a recent survey of SMEs showed that rather than shying away from offering training, many believed it was critical in order to keep mature employees engaged up to their retirement.
Health
According to a survey conducted by mentalhealth.org.uk found that 22% of men and 28% of women aged 65 years and over are affected by depression.
These figures may seem high, but appears to correlate with the Department for Work and Pensions “Fuller Working Lives” document, which shows half of people aged 50 and above had a long-term health condition.
And then there is the health of others which could have an impact, as illustrated by TUC’s study “Age Immaterial” which showed 49% of women over 50 were caring for an elderly relative.
Providing healthcare for all employees may seem like a financial burden, but when lost working days, high turnover and drop in productivity costs the UK economy £26 billion a year – averaging out at £1000 per employee – it puts the cost of healthcare provisions in perspective.
Any healthcare initiatives need to be across the board to avoid discrimination and could be well worth the effort and costs. After implementing their mental wellbeing strategy, BT reported a 30% drop in sick-leave related to mental health in 2012.
Third party restrictions
As much as an employer might like to send an older employee on a training course, or provide them with the same level of health benefits and income protection as their younger colleagues, they may not have had control over third party rules and cut-off points. This had put employers in a difficult position, as an employee could have made a claim against them for failing to give them access to these services or training opportunities.
In light of these concerns, which only escalated once the default retirement age was abolished, the Government allowed exemptions within the Equality Act whereby an employer is not deemed to be discriminatory if they fail to provide third party services for employees who are over 65 or the state pension age. The only time this exemption doesn’t apply is if the employer themselves is an insurer.
Retirement
According to a recent survey from Pension Insight, 38% of employers felt a keen responsibility towards their employees facing retirement, with 71% planning an overhaul of their retirement options with regards to defined contribution arrangements.
With an increasing number of employees caring for their parents while still financially supporting their children, flexibility around retirement plans is going to become crucial.
With new challenges presented by a demographically altered workforce, there is always going to be an increased risk of claims made against an employer for issues such as discrimination, however unintentional. Employers’ liability insurance can help cover the cost of these claims and allow employers to manage them if or when they arise.
