Currently the default retirement age (DRA) of 65 is a bone of much contention, so much so that the Government has brought forward a review of the legislation, which allows employers to compulsory retire people at 65 to 2010.
The Chartered Management Institute (CMI) has a clear view. We would like to see the abolition of the DRA, to enable businesses to retain their talent. Managers know that the UK has an ageing population, which means increasing numbers are able to work productively into their later years.
Clearly, the recession has had a significant impact on the labour market, but there are still skills shortages in some key areas, including management. Older employees may have these valuable skills and experience, so keeping them in work longer is a powerful driver for managers to support performance.
Joint research by the CMI and Chartered Institute of Personnel Development (CIPD) in 2005, confirms that employer’s interest in keeping older employees is driven by a concern to retain valuable skills and talent:
* 93pc of those surveyed agree updating skills is worthwhile
* there is no cost advantage from shedding older, more experienced workers
* flexible working is a much better answer but is not as prevalent as the CMI would like
One way of potentially cutting the necessary costs, but retaining skills within the organisation could be in the form of flexible working.
These arrangements are key to keeping skills and implementing better solutions around retirement. CMI research shows that 68pc of managers anticipate working part-time towards the end of their career. Also 24pc said that this would be the most important factor in their decision-making on when to retire.
Unfortunately, these arrangements appear to be available only to a minority, with only 34pc offering part-time working to older employees. So, organisations are missing out on their chance to retain their talent and cut costs at the same time.
Ultimately, older employees with the right skills and experience, possibly gained from the last recession in 1991 are of great benefit to UK business. They play a valuable role in coaching and mentoring younger employees. Older employees are keen to give something back, which employers are looking to develop the talent of Generation Y, the younger people who are arguably the future of our companies. So, it is clear that the benefits of having older employees with a wealth of skills and experience far outweigh any negatives, which adds further weight to the argument for the eradication of the DRA.
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