Monday, June 27, 2011

EBRI: Delayed Retirement May Not Be Enough To Cover Basic Expenses and Health Care

According to an EBRI Issue Brief, many Baby Boomers and Gen Xers would not have adequate income to cover their basic retirement expenses and uninsured health care costs even if they delayed their retirement past the age of 65. A major factor that does make a difference in a person’s ability to meet their basic expenses and uninsured health care costs in retirement, is the whether they are still participating in a defined-contribution retirement plan (such as a 401(k)) after the age of 65.

In "The Impact of Deferring Retirement Age on Retirement Income Adequacy," published as EBRI Issue Brief No. 358, EBRI reports that the lowest preretirement income quartile would need to defer retirement age to 84 before 90% of the households would have a 50% probability of success. "Although a significant portion of the improvement takes place in the first four years after age 65, the improvement tends to level off in the early 70s before picking up in the late 70s and early 80s." At the other end of the spectrum, 75.9% of households in the highest preretirement income quartile are likely to have adequate income for retirement if they retired at age 65. This increases to 81.1% if they keep working to age 69.

In addition, the study noted another major factor in ensuring adequacy: whether stochastic post-retirement health care costs are excluded (or the stochastic nature is ignored).
For the lowest preretirement income quartile, the value of deferral (in terms of percentage of additional households that will meet the threshold by deferring retirement age from 65 to 84) decreases from 16.0 percent to 3.8 percent by excluding these costs. The highest preretirement income quartile experiences a similar decrease, from 12.8 percent to 2.6 percent.
Source: Employee Benefit Research Institute Press Release (June 7, 2011)

Tuesday, June 21, 2011

United Kingdom: Researcher Argues for Scrapping Pension Retirement Age for Years of Service

As the United Kingdom debates a bill that would equalize a women's pension age with men's at 65 by 2018 then start to rise to 66 along with men's in 2018, one academic is pushing the argument that the government scrap the pension age altogether and instead base entitlement on the number of years someone has worked.

Sarah Harper, Professor of Gerontology at Oxford University and Director of the Oxford Institute of Ageing, and one of the authors of "Living Long and Prospering?" told a BBC interviewer that the pension age would not reflect the discrepancies in individuals' life expectancy, and it would be fairer to move the pensions system away from age and instead relate it to the number of years worked.

As an example, she compared a low-income male, with an unhealthy lifestyle who retired at 65 in ill health, who could expect to live another 12 years, with a high income male, who was a manager and professional who could easily reach his late 80s--an 11-year difference. If there were a 45-year work requirement, their years of collecting a state pension might be very similar.

Harper did note, however, that even under her proposal, provision would have to be made for some groups of people who had been outside the workforce.

Source: BBC "Scrap pension age, academic says" (June 20, 2011)

Monday, June 20, 2011

United Kingdom: Survey Compares Older and Younger Workers on Training Opportunities, Performance Reviews, and Health

The Chartered Institute of Personnel and Development (CIPD) says that a survey found that older workers are often neglected when it comes to training and performance management and cautions United Kingdom employers about the need to ensure they are managing the performance of all employees effectively, particularly before the final phase out of the default retirement age. In addition, the survey "shoots down the myth" that workers’ ability to do their job suddenly declines after they hit 65.

According to CIPD's "Employee Outlook: Focus on an Ageing Workforce," 46% of workers aged 65 and above report they have had a formal performance appraisal either once a year or more frequently, compared to 65% of all employees. In addition, 44% of employees aged 65 and above have not had a formal performance appraisal in the last two years or never, compared to an average of 27%. With respect to training opportunities, the survey found that 51% of those aged over 65 said they had received no training in the last three years or never, compared to 32% across all age groups.

On health issues, the 28% of older workers said their physical ability has declined a lot and 51% saying their physical ability has declined a little. However, while workers aged up to 34 are significantly less likely to report a decline in their physical ability to do their job, thereafter there is little difference between the youngest and the oldest workers, with 17% of 34–45-year-olds saying their physical ability has declined a lot and 51% a little. In addition, 91% of workers aged 65 and above say their mental health is good or very good, compared to a survey average of 74%; 69% of older workers report their physical health is good or very good compared to 64% for workers across all age groups.

Source: Chartered Institute of Personnel and Development Press Release (June 20, 2011)

Research: Costs of Illness and Early Retirement of Older Workers in Australia

Australian researchers have published results showing that illness-related early retirement has significant economic impacts on both the individual and on governments as a result of lost income, lost taxation revenue and increased government support payments, and quantifying the extent of these impacts for Australia. According to "Economic impacts of illness in older workers: quantifying the impact of illness on income, tax revenue and government spending"
[P]ersons out of the labour force due to illness had significantly lower incomes ($218 per week as opposed to $1,167 per week for those employed full-time), received significantly higher transfer payments, and paid significantly less tax than those employed full-time or part-time. This results in an annual national loss of income of over $17 billion, an annual national increase of $1.5 billion in spending on government support payments, and an annual loss of $2.1 billion in taxation revenue.
The authors--Deborah J Schofield, Rupendra N Shrestha, Richard Percival, Megan E Passey, Simon J Kelly, and Emily J Callander--conclude that "In the past, policy has focused upon economic incentives to defer retirement. However, as ill health is a primary barrier to workforce participation in older Australians, economic incentives alone may not be able to increase participation if the underlying health conditions are not addressed. Investment in improvements in health is potentially an important way of improving national living standards."

Source: BioMed Central Public Health Volume 11 Abstract (June 1, 2011)

Thursday, June 16, 2011

Global Coaltion Announces "Global Principles on Population Aging" To Transform World Aging Crisis

The Global Coalition on Aging, has issued a call to transform the worldwide "aging crisis" into an opportunity to drive global economic growth by having governments, corporations, NGOs and other stakeholders make a fundamental shift in their policies and priorities. Specifically, the Global Coalition is asking these groups and individuals to adopt their seven "Global Principles on Population Aging."

The principles include statements advocating public-private cooperation in the development of solutions, as well as the adoption of a holistic, optimistic view of aging. They represent the Global Coalition’s core focus areas--technology, innovation and biomedical research; health and wellness; education and work; and financial security. For those focused on the aging workforce, the fifth principle states:
A productive aging society requires a flexible approach to work, retirement and learning that enhances individual contributions to the economy and personal fulfillment over the life span.
With such members as Aegon, Novartis, and Bank of America Merrill Lynch, and through its website, the Global Coalition aims to challenge and provoke corporate and global leaders to rethink and reshape their actions to maximize the potential of population aging.
“This unalterable demographic shift is already challenging our traditional institutions that as designed can only accommodate a fraction of the aging community they now serve,” said Michael Hodin, Executive Director of the Global Coalition on Aging. “These principles--the product of collaboration among our member companies--invite all stakeholders to address the demographic realities of our changing society. It is becoming increasingly clear that the governments, companies and individuals who take action to turn aging from one characterized by dependence and disability to healthy and active will be the winners of the 21st-century competitiveness race.”
Source: Global Coalition on Aging Press Release (June 15, 2011)

Urban Institute Launches Online Data Source for Retirement-Related Statistics

The Urban Institute’s Program on Retirement Policy has launch an online resource for retirement-related statistics called the "Data Warehouse." At the Data Warehouse, users can glean how different aging populations are faring and get a look at long-term retirement trends. Among other things, the Data Warehouse has a specific page dedicated to older workers, on which are collected statistics relating to:
  • labor force participation
  • employment
  • unemployment
Source: Urban Institute Abstract (June 14, 2011)

Wednesday, June 15, 2011

Focus on Ergonomics for Aging Workforce Can Be Good for Bottom Line

The blog of the National Association for Environmental Management (NAEM) published an interview with Blake McGowan, Ergonomic Engineer with Humantech Inc., who advocates that businesses apply the principles of ergonomics in a systematic and invest in ergonomics for the aging workforce in particular in order to cut costs and enhance performance. According to McGowan:
A lot of companies are also beginning to realize that they need to have experienced workers in their organization in order to be successful. These are the experienced people in the workplace; who have been with the company for many years, who understand the unwritten worlds, how to solve complex problems, so we definitely need to figure out ways to keep them.
Applying ergonomics can be as simple as providing people with correct working heights or changing the way workstations are lit. However, it can also be as complex as reducing strength requirements for job tasks, which could be a big deal, especially in heavy manufacturing.

NAEM also presented a webinar--"Ergonomics of an Aging Workforce"--on May 24, 2011, which continues to be available for purchase online, which explores the dynamics of an aging workforce and the role safety/ergonomics can play in maximizing the potential of a company’s experienced employees.

Source: National Association for Environmental Management The Green Tie Blog posting (May 23, 2011)

Tuesday, June 14, 2011

Economist Argues Eliminating Earnings Test on Social Security at Age 62 Will Help Retain Older Workers

The Journal of Applied Business Research has published an article by Robert E. Pritchard, professor emeritus of finance at Rowan University, which suggests that eliminating the existing earned income restrictions imposed on Social Security benefits received at age 62 would provide an incentive for people to worker longer, thereby increasing the total economic output and helping to stimulate employment growth.

In his article--"Creating Social Security Incentives for Older Workers to Remain In the Workforce," Pritchard argues that such a change would mean, among other things that, workers would realize a significant increase in income when they continue to work full-time and collect Social Security benefits, giving them an incentive to continue working. Furthermore, he says that once older workers become accustomed to collecting Social Security benefits while still working full-time, they will feel a strong incentive to continue working full-time.

Source: National Center for Policy Analysis Daily Policy Digest (June 14, 2011)

Bank of America Reports Employers Focus on Financial Benefits Plans To Retain Employees

According to a study conducted for Bank of America, 94% of employers believe it is important to retain older employees for a longer period of time before they retire in light of the talent and skills they possess. The Workplace Benefits Report examined ways in which employers are helping to address the financial needs of perhaps the most demographically diverse workforce in history and found that 50% of employers offer flexible or customized work schedules, 33% are implementing education around retirement income and health care topics, 32% offer continuing education and development opportunities, 22% give employees the opportunity to work remotely, and 21% are offering extended benefits to older employees.

In addition, the study notes:
  • Employers feel increased responsibility for financial well being of employees.
  • Recession and uncertainty of entitlements places increased importance on financial benefits, ignites positive savings actions among employees of all ages<.
  • Employers offer a broader range of financial education and advice, though lack of personalization and communication may limit employee engagement.
  • Employers look to enhance financial benefit plans to address the changing needs of employees and win the war for talent.
Source: Bank of America Press Release (June 14, 2011)

Thursday, June 09, 2011

Europe: Companies Not Meeting Diversity Challenges, Particular of Aging Workforce

A study by The Boston Consulting Group and the European Association for People Management of European companies reports that major European organizations display little diversity in the ranks of their top management. In a Focus report "Hard-Wiring Diversity into Your Business," the two groups analyzed how 444 executives responded to survey questions about the challenges in diversity management and, among other things, found that the business risk caused by demographic change (aging) was cited as the greatest diversity challenge by 48% of the survey respondents.
"Our research has shown that the business case for diversity is clear and that HR needs to integrate such measures into its broader people policies. A modern workplace must represent its customer base in order to be truly effective and to deliver products and services that drive it to the competitive edge in a global environment," explained Stephanie Bird, an author of the report and the director of HR capability for the Chartered Institute of Personnel and Development (CIPD).
The report explains how employee diversity can be increased to advance business imperatives through several steps: (1) creating transparency, (2) redefining recruiting, (3) promoting diversity, (4) building leaders for the 21st century, (5) retaining employees, and (6) making progress visible.

Sources: The Boston Consulting Group Press Release (June 8, 2011); European Association for People Management News Release (June 8, 2011)

Monday, June 06, 2011

Canadian and irish Researchers Find that Older, Rural Workers Satisfied with Non-standard Work

Researchers studying urban and rural workers in Newfoundland, Ontario and Ireland report that the non-standard work often called a "dead-end job" has little impact on the happiness of older rural workers. Of all older (40 plus) rural workers, a majority were found to hold jobs other than year-round, full-time positions--including long- and short-distance commuters, part-time, seasonal, self-employed, early retirees--and generally these workers report being satisfied with their work-life balance, and even those supposedly holding "jobs of moderate or lower quality tend to make the best of their jobs and focus more on their non-working lives."

The researchers were led by Gordon Cooke, an associate professor at Memorial University of Newfoundland, and they presented in two papers at the Congress of the Humanities and Social Sciences, one by Sara Man of the University of Guelph and one co-presented with Deidre Hutchings, MBA student at Memorial University of Newfoundland. According to an article in the Vancouver Sun:
Using a massive Statistics Canada employment survey database including 25,000 employees in 6,000 workplaces, they found that just 6.8 per cent of 40-plus workers hold unskilled jobs with low pay and benefits. Seventeen per cent work in jobs with non-standard hours, but they have high levels of job satisfaction, ranking themselves an average of 3.3 out of 4.
Sources: CNW Group Press Release (June 3, 2011); Vancouver Sun "Older, rural workers OK with non-standard jobs, research shows" (June 5, 2011)

Survey: Top and Bottom Employers by Percentage of Workers over 50

A survey of Fortune 500 companies by RetirementJobs.com reveals that the airline industry has the highest percentage of employees over age 50, with American Airlines held the #1 position with 39% of its staff over age 50. On the other side, technology companies rank the lowest, wtih Google having ust 13% exceeding that age threshold and AECOM Technology holding the #1 positionn with 6.041% of its workforce over 50.

The survey--"Fortune 500 Companies: 2011 Rankings by Prevalence of Workers Age 50+"--is touted by RetirementJobs.com CEO Tim Driver as "helpful to age 50+ job seekers and existing employees to understand which companies and industries tend to employ a disproportionately high or low percentage of mature workers." In addition, he notes that "It is important to remember that while the findings might show where age bias is more or less prevalent, at this point we do not have information on whether or not these employers have committed to hiring older workers. We simply know that they do or do not tend to already employ older workers."

Sources: Retirementjobs.com Press Release (May 31, 2011); Second Act "Companies with the Most Older Workers" (June 6, 2011)

Thursday, June 02, 2011

Gallup Poll Finds Many Workers Expect To Work after Retirement Age

Gallup Poll has released survey results finding that 80& of American workers think they will continue working full or part time after they reach retirement age, ithe slightly more (44% to 36%) of them saying they will do so because they "want to" rather than because they "will have to." In addition, the poll--conducted April 7-11, 2011, with a random sample of 534 employed adults, aged 18 and older, living in all 50 states--finds that 63% of workers expect to work part time after retirement age, 18% expect to work full time, and another 18% expect to stop working altogether.
The 80% of current workers expecting to work past retirement age highlights the differences in retirement experience and expectations between current and future retirees. A separate question in the poll found a total of 18% of current retirees saying part-time work is a major (2%) or minor source (16%) of retirement income for them, compared with 74% of nonretirees (including those currently working and those not working) who expect part-time work to be a major (22%) or minor (52%) source of income in retirement.
Source: Gallup Poll News Release (June 1, 2011)