Older workers keen to work less while earning a similar salary will increasingly be approaching employers with proposals for flexible work, according to Right Management. During a breakfast, entitled -Managing Boomers in the new Superannuation Environment, the company also emphasised that employers need to take a proactive approach to accommodating older workers if they are serious about retaining them.
According to Right Management, when the Federal Government’s Better Super regime took effect in July 2007, it handed employers a powerful tool for engaging and retaining their older workforce. However, it also created a catalyst for change, and will reshape the way baby boomers approach work and retirement. A growing number will seek to leverage the new superannuation rules to enhance their work/life balance, and employers must ensure they are geared up to meet these expectations, or risk losing these valued people altogether.
The implementation of a -Transition to Retirement- strategy makes it possible for some older workers to work less while continuing to earn a comparable income.
Individuals who have reached their preservation age but are still working can access their accumulated superannuation while maintaining employment, drawing from their preserved benefits, and salary sacrificing back into superannuation. Many of the principles contained in Better Super enhance this strategy and make it a better option.
This has the effect of moving a proportion of gross salary away from the income tax environment of up 46.5%, to being directed to super and incurring 15% tax.
Moreover, after reaching 60 years of age, current superannuation benefits, where earnings are taxed at 15%, can be moved to the pension environment where earnings are exempt from tax. The result is that people can work less while earning a comparable income.
The ageing population presents fundamental challenges for employers, who face both a shrinking labour pool and a potential exodus of baby boomers. As individuals begin to take accountability for their pathway to retirement, employers must also get on board. Their challenge is being able to say -yes- to older workers when presented with a plan for flexible or part-time work, which now makes economic sense for them.
Moreover, employers will give themselves a huge advantage attracting and retaining the grey workforce, if they proactively embrace such a model and offer it to staff.
Right Management’s approach to the challenge tackles the problem from both sides through its Life Options program.
Life Options works by empowering individuals and giving them the tools to plan for the next phase of their life. It is a process of assessment and exploration followed by the development of a transition plan to their future lifestyle.
At the same time, Life Options assists employers to meet the needs of these individuals from an organisational perspective. The new paradigm may take some adjustment for both sides but if it means people can continue in their job, satisfied and engaged, beyond the minimum retirement age, then it is a win-win situation for everyone.
Meeting the needs of older workers can also be an effective driver of employee engagement, as Right Management’s engagement data reveals that on average, 69% of employees aged 50 – 65 are disengaged at work, compared to 60% for those in their 30’s and 40’s.
Employers who develop a retention strategy aimed squarely at the needs and aspirations of baby boomers can effectively demonstrate that they value, understand and want to keep their older workers. Knowing you are appreciated makes all the difference when it comes to engagement and retention - regardless of age.
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