Older workers who long for something in between full-time work and retirement are starting to get their wish, as more and more companies develop phased retirement programs, reports The Wall Street Journal. The pandemic opened the door to flexible work arrangements, and bosses are motivated to keep older workers with important skills amidst the competitive hiring market and the soaring rate of retirements.
Of the 1,736 HR executives around the world surveyed by Mercer LLC, 38% say they offer phased retirement—twice as many as before the pandemic, when that amount stood at 17.2%. In 2016, 16% of U.S. employers had phased retirement programs. That grew to 23% in 2021, as employers look to retain talent as the U.S. workforce ages, the article explains.
Phased retirement programs can offer financial and mental benefits to workers who want to continue working but also want to devote some of their time to other endeavors, such as charitable work, recreation, or travel. However, working out the details of participation can sometimes to be tricky, with possible legal and financial complications. Certain rules of some pensions and 401(k) plans can produce complexities, as some workers may want to dip into their retirement benefits as their paychecks become lower. While some employees aged’ 59 1/2 and older can tap into their 401(k)s, not every company allows that because it could encourage workers to retire too early.
As the pandemic accelerated the rate of retirements, with 2.6 million more retirements than expected between February 2020 and November 2021, employers have become more and more creative in retaining workers, especially those with hard-to-replace qualities. Some phased retirement programs involve older employees training younger workers to eventually take their place and others combine elements of contract work with stable pay and benefits, such as the U-Work program at Unilever. Workers in the U-Work program can take extended breaks between projects in return for committing to work for a set number of weeks each year, retaining a monthly fee and some benefits.
Other companies offering phased retirement programs include Owens Corning, SAP North America, and Haynes International Inc. 30 employees have gone through the program at Owens Corning, and 75 are in Unilever’s U-Work program. The goal, says Morag Lynagh of Unilever, is to provide “flexibility with security”—something more and more employees are looking for as they move into the next phase of their lives.