Bringing Flexibility Back to Retirement: An Interview with Paul Rupert

By Robin Hardman, Robin Hardman Communications

These days, “flex work” is often taken to mean one thing: the ability to work from home. So you may not be aware that when the concept of flexible work arrangements was first introduced, in the 1970s and 80s, it referred to a long menu of options, from flexing start and end times to job sharing, compressed work weeks, and many other arrangements that have fallen off the collective radar.

One of those lesser known options is phased retirement—an alternative to standard retirement policies through which the employee eases gradually into retirement with a reduced work schedule. In an effort to better understand how this works, I recently spoke with Paul Rupert, President of Rupert & Company, which helps companies design and implement phased retirement policies. Here’s how that conversation went:

First, let me make sure I know what we’re talking about. What is phased retirement? How does it work?

Different companies set it up in different ways. The way it was originally conceived, and is sometimes practiced, employees “step down” their work over time, maybe starting at 80%, then going to 70%, 60%, and so on. More commonly it’s just a straight 80% schedule over a set period of time, after which the employee retires completely.

Pay and benefits are just pro-rated?

Yes—which is a lot easier to do these days than it once was, especially since payroll systems are automated. Sometimes there’s a little less flexibility around pro-rating benefits, since those are often administered by a third party. One traditionally challenging area—keeping pensions intact—has become easier to deal with as 401(k)s have become common.

Why the need for phased retirement?

People want it. We’re living much longer than we used to. The average life expectancy has risen by six years since just 1970—it’s now 80 years old. What are we going to do with all those years—and how are we going to pay for them? There are credible surveys showing that about two-thirds of workers of all ages—not just older workers—assume they will be able to ease into retirement at the end of their work life, and the majority of those over 50 say that an option for formal phased retirement is very or somewhat important. In contrast, a 2016 survey of companies found just 5 percent were offering formal phased retirement. That’s an enormous gap. And because it’s not something companies generally survey for, many are not even aware of this. They continue to offer retirement policies that are based on false assumptions.

Ok, I can see why an employee might want to ease into retirement this way, but what’s in it for the employer?

Well, many things. One significant benefit can be knowledge-transfer. Think of all the expertise companies stand to lose each time a long-standing employee retires (and the cost of that)! This isn’t always about the obvious kinds of knowledge either. For instance, if you’re losing technical expertise, you can probably hire someone pretty easily to fill that gap. But someone who knows your customers, and their history with your company, has information that’s irreplaceable. So knowledge-transfer should always be built into any phased retirement plan.

What else?

When people think about work-life balance, they generally focus in on 30-somethings—the employees likely to have young kids at home. But the responsibilities of parenting don’t end as your kids get older—in some cases, they get even more complicated. And even when the kids are not in the picture, there are other responsibilities. There is elder care, of course—in our aging nation, employees in their 50s and 60s are very often grappling with small or big responsibilities toward a parent or other older relative. Then there is care for other adult family members—many older employees find themselves caring for a spouse or partner.

But for employers, the business benefits of addressing work-life conflict often come down to attracting and retaining top employees. Does this apply to employees nearing retirement age?

Sure. Since we know that even younger employees want and expect the opportunity to ease into retirement, having a policy like this in place is a way to attract good employees at any age. As for retention—look at it this way. If you have two employees in front of you, both high-performing, one a 24-year-old who has been with the company for a year and whose career could go in any direction, and one a 57-year-old who has been with the company for 30 years—who are you going to bet on in terms of retention? The older worker has already demonstrated retention. Isn’t it worth doing what you can to hold onto that employee?

Ok, but let’s take those same two employees. Don’t employers have reason to want to replace older, less energetic and tech-savvy employees, with young employees who can be paid less?

There are employers who say that sort of thing, but it’s often based on some combination of myth and assumption. And staffing decisions are always about a specific contributor—not a “class.” A given older worker can be just as hard-working, energetic, and productive as a younger one—maybe more so. (Just look at the two people who just ran for president. Both are well-past retirement age!) And despite what people might think, there’s data showing a higher level of computer-literacy among people over 55. There are even several studies showing that large percentages of older people adapt just as quickly as younger people to new systems in work settings. A lot depends on the system more than the person. So, again, where do you want to put your resources as an employer?

Since there are lots of excellent business reasons for offering phased retirement, why aren’t more employers doing it?

When people first started advocating for telecommuting, years ago, they faced a whole community of assumptions. The biggest one was, “how will I know employees are working if they’re not here on-site?” It was a long time before it became accepted that this was a non-issue. You know telecommuting employees are working the same way you know any employee is working—you look at the results.

There are similar assumptions about phased retirement today: Employers are worried that going part-time means employees will start to slack off. That the new arrangement will put an additional burden on  managers. And there’s a fear that if some employees are ok’d for a phased retirement arrangement and others aren’t, the company will be opening itself up to age discrimination lawsuits. Yes, these are theoretical possibilities. But these worst-case scenarios have not occurred where well-designed initiatives have been developed. .

Are there examples of companies that have successfully implemented phased retirement?

Yes, absolutely. We have worked with a number. There are good examples in several industries, such as the manufacturer Herman Miller; Columbia University; and the hospital system Scripps Health. They’ve all had successful programs in place for many years. The programs all very different, based on the organization’s needs and the work being done.

Ok, so what’s the next step for a company interested in implementing phased retirement?

Do the research to understand what’s appropriate for your organization and your workforce, and get started. It’s important to tackle the pieces of this with a good team, including external experts where necessary, who can help with conducting needs assessments, developing training programs, and so on. There’s often a fair amount of misinformation that needs to be addressed as the process gets ironed out, so it’s quite valuable to involve people with experience.

© 2016 Robin Hardman Communications

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