Canada Gets High Marks for Responding to Aging Workforce

According to a new research report by Schroders, Canada has been facing up to the economic challenges of an aging population, but will still need to do more. The authors--Virginie Maisonneuve, Head of Global Equities at Schroders, and Katherine Davidson--conclude that Canada has been quick to recognize its impending demographic transition and adjust its institutions accordingly. The only ways to break the relationship between reduced labor supply as baby boomers retire and lower GDP growth is "to increase immigration or raise participation rates, especially of older workers" and Canada is doing just that.

The report says, however, that future growth will have to be driven by improvements in labor productivity and Canada is expected to face the highest age-related spending of any OECD member state. Here, too, Canada looks to be in good shape, with a strong record in controlling costs. For example, it spends 10% of GDP on health care versus the US at 16%, and it relies less on the state for pension provision with private pensions and other investments providing over 40% of retirement income, compared to the OECD average of 20%.

Source: PR Newswire News Release (July 21, 2011)

Massachusetts: Two Reports Focus on Rise in Older Worker Population and on Retaining Older Workers

Commonwealth Corporation released two new reports focusing on the aging population in Massachusetts, its effect on the labor supply, and strategies for retaining older workers. Among other things, according to the reports, by 2020, almost 27% of Massachusetts workers will be age 55 or older, Already some industries have a high percentage of older workers--in education and health services, almost a quarter of employees are 55 or older, and in repair, maintenance and personal services, the number is 28.2%.

One report--“The Increased Presence of Older Workers in the Massachusetts Labor Market”--provides an overview of trends in the labor force among the nation's older population and presents more recent labor market outcomes of older workers in the nation and in Massachusetts. This report also examines the industries and occupations in which older workers in Massachusetts are employed and the change across the different industries/occupations.

The other report--“Retaining Older Workers”--summarizes the projects that participated in Commonwealth Corporation's Older Worker Retention Strategies Grants funded by the Workforce Competitiveness Trust Fund and presents findings and lessons learned from the pilot projects.

The reports are joint projects of Commonwealth Corporation and the Center for Labor Markets and Policy at Drexel University and Community Matters, respectively.

Sources: Commonwealth Corporation News Release (July 20, 2011); Boston Globe "A jobs pinch for the ages" (July 21, 2011)

United Kingdom: TUC Report Finds Improved Job Market for Older Workers and Retirees Since 1992

A report issued by the UK Trades Union Congress (TCU) finds that the years since 1992 have seen a significant increase in the proportion of over-50s and people over retirement age in employment. According to "Age and Gender: What has changed in the labour market in recent years," among other things, the percentage of people aged between 50 and 64 in work has risen from 56.5% in April 1992 to 64.9% in December 2010, and, over the same period, the proportion of those aged over 64 in work rose from 5.5% to 9%.

While the report also reveals that young people have become less likely to be in employment over the same period, TUC General Secretary Brendan Barber said that "It is a mistake to blame older workers for youth unemployment--they tend not to be doing the jobs young unemployed people might expect to get." Barber also said:

'Older people bring a wealth of skills and experience to the workplace. The increasing number of over 65s in work shows that older workers are highly valued and that the government is absolutely right to scrap the default retirement age.

'But there is a darker side to people to working beyond their retirement. Low wages and poor pension provision, particularly in the private sector, mean that many people simply cannot afford to retire at 65. The failure of far too many employers to help staff save for their retirement is forcing these people into pensioner poverty and placing a huge cost burden on the state.

Source: Trades Union Congress Press Release (July 13, 2011);

Survey Finds Boomers Preparing To Work in Retirement

A survey conducted by SunAmerica Financial Group in collaboration with Age Wave reports that more Americans are expecting to retire later and work throughout it. The "SunAmerica Retirement Re-Set Study" found a significant shift in attitudes and actions since 2001, when SunAmerica conducted its initial landmark retirement study with Age Wave. In particular, it reports that:

• 54% of people 55 and older view retirement as a new chapter in life, rather than a winding down—-up from the 38% that held a similar in 2001
• pre-retirees say they now intend to delay retirement by five years—-from 64 to 69
• almost two-thirds of those surveyed say they would ideally like to remain productive and include some work in retirement to stay active and involved

Source: SunAmerica Financial Group Press Release (July 12, 2011)

Europe: Aging Population Requires Making Full Use of Available Employment Potential

Speaking at an informal meeting of the ministers for labor and social affairs, Leila Kurki, president of the Section for Employment, Social Affairs and Citizenship of the European Economic and Social Committee, said that "future pension funding needs will not be determined by the demographic ratio (ratio of older people to people of working age)" but that "the decisive factor is rather trends in the economic dependency ratio, or in the ratio of people receiving benefits to people in employment.” Thus, governments should focus on effectively increasing labor market participation rate of people of working age rather than focusing on making changes to pension systems, tightening pension conditions, weakening pension rights or raising the statutory retirement age.

“Jobs must be designed so that people are able to work at least up to the statutory retirement age.” Kurki pointed out that this would entail radical changes in working life.

Work and management would have to be organised in a way that accommodated ageing at every stage of a person’s career. Working conditions and the working environment must be adapted to suit workers of different ages. Discrimination and negative value judgments against older workers must be combated.

Updating of professional skills and preventive healthcare were of key importance.

Source: European Economic and Social Committee Press Release (July 7, 2011)

Israel Debates Raising Retirement Age for Women

Although not yet officially released, Israel's Finance Ministry Committee on Female Retirement Age is expected to recommend raising the retirement age for women from 62 to 67, and not to 64, to the same as men, and opposition is coming from many quarters. According to an article in Haaretz, there is widespread opposition in the Knesset, which must approve any changes. In addition, both Talia Livni, president of the Na'amat women's organization, and a representative of the Histadrut labor federation, quit the public committee after the issue turned to raising the age to 67 instead of the original 64 when the the committee was appointed.

An editorial in the Jerusalem Post acknowledges that, since improved medicine and higher living standards are leading to rising life expectancies and an increasingly older population, the recommendation sounds reasonable enough. However, it stated that before the retirement age is raised for women, steps should be taken to ensure more women enter the work force and stay employed longer. Among other things, the Post noted that just 62.2% of women aged 55 to 59, and 6.5% of women aged 65 or older, participated in the job market in 2009, compared to 76.7% and 17.8%, respectively, of men.

Unlike in Europe, where dwindling birth rates, combined with higher life expectancy, has resulted in an increasingly older population, Israel’s balance between young and old is even. Israelis over the age of 65 make up just 9.8% of the population, compared to an OECD average of 14.6%. As a result, the need to raise the retirement age is less pressing here.

We are, nevertheless, outpacing the OECD in the speed at which we are raising the retirement age for women. The average retirement age for women in OECD countries will reach 64 after 2030. If the Treasury has its way, this will happen here in 2017.

Sources: Haaretz (July 1, 2011); Jerusalem Post "A fairer retirement for the fairer sex" (July 5, 2011)

Multi-generational Workplace: Managing the Technology Gap

CIO Inisght has published a series of articles showing employers how, through a combination of policies, programs and tools, it’s possible to bridge the technology generation gap and engage all employees and build a robust and motivated workforce. In them, Samuel Greengard notes that attitudes across generations differ greatly, and cites an Accenture technology strategist saying younger workers are thumbing their noses at IT policies, using nonstandard applications and "improving" things whenever and wherever they deem it necessary.

Greengard's recommendations for organizations to address multi-generational challenges are:

1. Develop a well-reasoned and balanced technology policy and ensure that employees read and understand it.
2. Provide training to workers--particularly older employees who may be well-versed in using email and Web tools, but are lagging in areas such as social media and crowdsourcing.
3. Rethink security and threat management. In this regard, forward looking organizations focus heavily on endpoint security and a more holistic protection model.

In addition, separate articles present:

• a list of five ways to narrow the age gap;
• a case study at UNISYS about bringing one's own device, and
• connecting a multi-generation workforce at a Canadian construction company.

Source: CIO Insight "Managing a Multigenerational Workforce" (June 30, 2011)

United Kingdom: Survey Shows Unemployment, Hiring Issues for Workers 55 Plus

A survey released by Aviva shows that 39% of over-55s have experienced redundancy, enforced early retirement or stopped work due to illness in the run up to retirement, and that 74% say it is harder to find work after their 55th birthday. Breaking down the numbers, "The Aviva Real Retirement Report: Issue Six" reports that Indeed, 15% report being made redundant, 11% were forced to stop work due to illness, and 11% were forced into early retirement.

In reaction to their financial difficulties, 68% of the over-55s said it has had a detrimental effect on their retirement finances, with 34% having to cut back on their lifestyle, 7% worrying about how to pay an outstanding mortgage and 11% considering using assets such as their house to pay for retirement. Nevertheless, the report says that 5% of over-55s saw the "count-down" to retirement as the opportunity to choose to move to "part-tirement" and 3% to start their own business.

In a story following up on the Aviva report, Jo Thornhill writes in This is Money that "The pensions crisis means over-55s will need a 'patchwork' of roles to boost retirement income". This would be a patchwork of part-time work, consultancy, self-employment and leisure time.

Source: Aviva News Release (June 29, 2011)

GAO Issues Report on How To Ensure Income Throughout Retirement

The U.S. Government Accountability Office (GAO), at the request of Sen. Herb Kohl, the chairman of the Special Senate Committee on Aging, has studied and released a report on how best to ensure income throughout retirement, finding that found that while most retirees rely primarily on Social Security, most Americans fail to maximize their benefits.

The report--"Retirement Income: Ensuring Income throughout Retirement Requires Difficult Choices"--finds, among other things, that around 72.8% took benefits before age 65, and only 14.1% took benefits the month they reached full retirement age, noting that, by taking the benefits on or before their 63rd birthday, 49.5% passed up at least 25% to 335 in additional monthly inflation-adjusted benefits that would have been available had they waited until full retirement age.

“As workers near retirement they not only have to focus on saving money but on closely managing their investment throughout their retirement years,” Kohl said. “This report shows that many Americans will need to save much more or work longer in order to avoid the very real risk of outliving their savings.”

Among the report's recommendations:

• Many retirees should delay taking Social Security to increase payments for life.
• Depending on net worth, households also should consider buying a life annuity, particularly if they don't have a traditional pension that guarantees sufficient income.
• Retirees should make withdrawals from their investment portfolio at a rate of no more than 3% to 6% annually at retirement, with adjustments for inflation, to help ensure they won't run out of money.

Source: U.S. Senate Special Committee on Aging News Release (July 1, 2011)

China: Workforce Potential To Decline Due to Aging Population

China's workforce population is at a turning point because of an aging population, according to an Allianz Group. Drawing on latest census, it says that China has a population of around 1.34 billion people, though population growth has nearly halved in the past decade compared to the decade before, and that population aging increased further not least due to the fact that according to estimates some 400 million fewer children were born as a result of the one-child policy introduced in 1978.

"Even if the one-child policy were relaxed or lifted, the decline in the workforce potential could be alleviated but no longer prevented," says Professor Michael Heise, Chief Economist and Head of Corporate Development at Allianz. The turning point for China's labor market will be reached in 2013, according to findings from the recent Allianz Demographic Pulse.

According to Allianz, it is important for China to establish a demographically sustainable social system as a matter of urgency in which capital-funded private provisions play a key role. Among other things, this could include increasing the retirement age to 65 years, thus delaying the demographic turning point by another three years and significantly lowering the age ratio in the long term.

Source: Allianz Group Allianz Demographic Pulse (July 1, 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)

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)

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)

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)

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)

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)

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)