The term “phased retirement” is used far too loosely to cover employer practices as diverse as one-off deals between a manager and a favored employee and the widely used strategy of “terminate/rehire” older workers as contractors. True phased retirement — what we call “Respectful Exits – means enabling a modified or reduced schedule as part of retiring from a full-time position. The devil is in the design details and the following principles and options offer guidance to employer and employee.
Employer principle: retention of valued employees beyond “retirement age”
- The options have to be diverse enough to appeal to many employees
- Work needs to be re-prioritized to align with reduced schedules
- Knowledge transfer and mentoring have to be well-designed and executed
Employee principle: ongoing employee status, benefits and a path to full retirement
- Assurance of longer employment on a reduced schedule
- Receipt of prorated benefits with no negative impact on pension terms
- Opportunity to eliminate low-value work and engage in mentoring
In this early stage of expanding phased options, it is valuable to broaden rather than narrow the possibilities that might be offered, requested and used. Some proven alternatives follow.
A schedule reduction from 100 to 80% that lasts 1-2 years is the simplest version of Respectful Exits. The duration can be set at other percentages and longer periods, such as 70% for 3-4 years.
This less common option offers reductions in annual increments such as 100-90-80-70% or a variation. This more flexible reduction process can fit the desire of many older workers to gradually adjust to retirement.
The desire to retire is often driven by the pressure to conform to traditional and unduly taxing ways of working. Long-term plans to combine telework, flextime and compressed schedules can offer a transition to other forms of Respectful Exit.
Many older workers who are offered “phased retirement” are actually terminated, returning as contract employees without benefits. Contracting can be a respectful option with clear terms and fair compensation to offset the cost of lost benefits
Knowledge transfer can be integrated into reduced schedules and include specific mentoring commitments. Or it can be a part of work redesign that allows a “new” full-time job – combining reduced work with a dedicated mentoring role.