A fluid approach to retirement can help organizations keep valuable employees and experience. Some companies offer part-time jobs for those approaching retirement, often paired with the opportunity to job share. Reduced work hours topped with a pension can make it easier for employees to transition into full retirement. Establishing rules and guidelines can help communicate this option to eligible employees.
Flexible retirement planning can be an attractive option for those who don’t want to stop working. This allows employees to retire gradually, typically transitioning from full-time to part-time work. During this period, the lost income from work can be supplemented by funds from their pension scheme. This arrangement is often tax-efficient as it reduces the income tax rate paid and can be a good way to stay current with industry trends. However, it’s important to note that it’s possible for people who choose a flexible retirement plan to run out of savings if they aren’t careful about the amount of money they withdraw from their pension fund. It is also important to note that reducing hours and taking out money from your pension fund simultaneously could cause you to fall into a higher income tax rate, so it’s advisable to consult with your advisor before making any changes to your retirement planning.
Staff who can continue working flexibly into their retirement age can also pass on their knowledge and expertise to younger colleagues, supporting succession planning for the future and ensuring high-quality care for patients and service users. In addition, allowing staff to access flexible retirement options can improve their work-life balance and financial well-being, helping to reduce sickness absence and stress.
A one-size-fits-all approach to retirement planning no longer works in today’s workplace. Employees are looking to their employers for assistance in preparing for retirement, and companies that offer phased retirement options are more likely to retain their employees. In addition to boosting morale, offering flexible retirement options can help employers reduce costs. The transitioning worker’s salary is usually less than they would be earning full-time so that the company can save money in payroll taxes. Furthermore, companies can often save money in the long run when hiring new workers—keeping existing employees on staff is typically cheaper than bringing in outsiders.
The retirement phasing option may also allow employees to get a feel for what it’s like to stop working completely before they retire. They can learn to adjust to the responsibilities of being out of the workforce and won’t have the financial penalty that often comes with an abrupt change in work status. It’s important to have a clear process for reviewing and evaluating retirement flexibility requests. This includes setting clear rules and guidelines for eligibility and how reducing hours will affect pension benefits.
It’s also a good idea to determine any knowledge transfer conditions or mentoring requirements the organization might require of phasing employees and communicate these.
Reduce Payroll Costs
Many people are concerned that they may not have enough pension savings to retire early. Using a flexible retirement planner to explore their pension savings and other income sources could clarify whether they could transition to retirement without jeopardizing their future financial security. A phased retirement scheme allows employees to work fewer hours while topping up their income from their pension savings. This can help ease their transition into retirement, allowing them to take up new hobbies or retrain in different areas. It can also help with morale, preventing the ‘loss of purpose’ that some people experience after retiring. As well as saving money on recruitment costs, offering this flexible retirement option can save organizations overall payroll costs. The price of retaining staff is usually far cheaper than the costs of hiring and training a new employee.
As the cost of health care and other pension plans continues to increase, it is becoming more important for employers to find ways to reduce these costs. Providing flexible retirement options can lower these costs by encouraging employees to remain in the workforce longer. It can also help with knowledge transfer, preventing the loss of crucial institutional knowledge when an employee leaves.
Gradually reducing work hours can help employees ease into retirement and provide a smoother transition. It can also allow older workers to continue contributing to their retirement plan while lowering their risk of outliving their savings and helping them prepare for a full retirement. A 401(k) rollover option effectively transfers retirement assets from a company-sponsored plan into a personal account. It allows employees to control their investments and gives them greater flexibility in their retirement planning. It is especially helpful for employees nearing their target retirement age or those with a long career. In addition to a phased retirement program, other flexible work arrangements can support an employee’s transition into retirement.
According to HR experts, these include allowing workers to continue their current position while shifting to a reduced schedule or moving to a project-based role. It can also allow for part-year employment, such as during the winter, or even rehiring retired employees on a consulting or contract basis. The best way to approach the idea of a flexible work arrangement is to position it as an opportunity for both you and your employer to benefit from one another.
Presenting it as a mutually beneficial solution is key to accepting your request. Focus on the benefits of a flexible schedule, such as the possibility to work fewer hours or shift your duties to a coworker, and emphasize how you will still contribute to the organization’s success.