Thursday, March 29, 2007

Conference Board Report Suggests that Phased Retirement is Becoming a More Viable Option

A report released by The Conference Board suggests that recent U.S. legislation means that more companies will be able to use phased retirement to retain valuable skills and knowledge while providing mature workers with an alternative to the all-or-nothing approach to retirement. While the IRS has yet to issue regulations under the Pension Protection Act of 2006, the Act opens up new options for companies that sponsor defined-retirement benefit plans, lifting restrictions that forbid employers from paying retirement benefits until an employee had terminated employment or had reached the plan's normal retirement age.

According to Anna M. Rappaport and Mary B. Young, the authors of "Phased Retirement after the Pension Protection Act", employers should first define the talent challenges that phased retirement might help solve and then should evaluate which of the many options for phased retirement would be most effective. Figuring out the compensation and benefits should be the final step.
Phased retirement can be any work arrangement that falls somewhere in between full-time retirement and working full-time. Formal phased retirement is still relatively rare, partly because employers are skittish about running afoul of pension laws, and partly because companies are reluctant to include all of their mature staff in a phased retirement situation.
While the report is available for purchase, the Conference Board press release provides further detail into the kind of decision-making process a company should adopt when considering the possibilities of implementing phased retirement.

Source: Conference Board Press Release (March 28, 2007)

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