"Having a purpose in life is so important in Japanese culture that our idea of retirement simply doesn’t exist there," writes Hector García; Francesc Miralles, in a book named Ikigai.
The book that talks about living a happy, purposeful and long life sold more than one million copies and is one of the top rated books. The growing popularity of the book and the concept of living a long life highlights how the population across the world wants to age differently.
According to data from World Population Prospects: the 2017 Revision, the number of older persons — those aged 60 years or over — are expected to rise globally from 962 million in 2017 to 2.1 billion in 2050 and 3.1 billion in 2100.
As we move towards the era of 100-year lives, it is time to relook at the centuries old concepts of retiring from work after a certain age. With more number of older persons in the world, economies and companies have to come up with more opportunities for the ageing population to protect their financial, mental and well-being. Further, the population itself would have to continuously invest in their skills and knowledge to be more prepared to work for longer time.
While all companies and economies across the globe are figuring out how they can face the era of 100-year lives, there are some progressive companies paving the way. For instance, last year, insurance company, Prudential Singapore removed the retirement age of 62 from its manpower policy.
Prudential Singapore's Chief Executive, Wilf Blackburn noted, “People who stop working at 62 could be looking at nearly 40 years of retirement if they live to 100. A long retirement could pose financial challenges should they outlive their savings and a prolonged period of inactivity could lead to health and social problems."
The points, Blackburn makes here are not only true but relevant and makes us ask:
Is it time to scrap retirement age from HR policy?
Empowering employees to decide when they want to retire, instead of controlling who retires when on the basis of age, can be a stepping stone to prepare both organizations and employees for the era of 100-year lives.
“As context evolves, some legacy concepts need to evolve with them. While a lot of youngsters are looking to go the fast burner route to try retire by 40s, there are those who are looking to value add till their body permits. Hence organizations need to relook where and how retirement fits in their context,” said People Matters RUL winner, Girish Kohli, DGM - HR at Bennett Coleman and Co. Ltd. (Times Group).
The popular opinion is that organizations in general have to now stop putting people in boxes and graphs. Similarly, defining when should employees retire on the basis of their age is also a practice that needs to be reconceived.
But how can organizations just give away the centuries old practice? What opportunities and challenges does scrapping retirement age entail?
Scrapping retirement age: The benefits
Blackburn believes that there is a lot that businesses can gain by tapping into the experience and knowledge of the more mature employees.
He said, “At Prudential, we see this group of employees as valuable assets and are committed to support them in extending their productive years by offering them re-skilling opportunities and flexible work schedules as we scrap the retirement age.”
Removing the retirement age from HR policy could be beneficial for corporations as they would be able to retain employees who are more engaged, skilled and purpose-driven, irrespective of their age. As skills become more relevant than age in the VUCA world we live in, whether an employee should work or not should be purely based on their merit, performance and their capabilities.
Further, by scrapping the retirement age companies can make a larger impact and economies, globally, can benefit from it. The ageing population poses a threat on nations’ GDP, HDI and overall development and growth. With ageing populations’ present more secured, their financial, mental and health well-being taken care of, the burden on the overall nation gets reduced.
But it can’t be ignored that in the coming decades countries would have to face fiscal and political pressures in relation to public systems of health care, pensions and social protections for a growing older population.
Scrapping retirement age: The challenges
While there are many benefits of not having defined retirement age at workplaces, there are some challenges its absences may cause as well.
Navnit Singh, Chairman and Regional Managing Director India at Korn/Ferry International believes, “A defined retirement age helps individuals plan their lives and future better and allows the company to create a succession plan for the growth of younger employees.”
The absence of a specific retirement age in the HR policy will lead to lack of structure and may hamper the succession planning for companies. After a certain time, it becomes important that leaders at the top move to a different role or retire and provide opportunities to other emerging leaders.
Therefore, before organizations act onto the idea of scrapping the retirement age, they should weigh the pros and cons of the decision, keeping in mind the nature of job and their business needs.
For instance, for less labor-intensive jobs, companies can have older employees working till until they are able to and wish to work.
Kohli suggests, “Typically new age and services industry where physical labour is not a prime contributor could actively look at evaluating its relevance in their context.”
“Mental alertness, work stress could be other parameters that they may need to keep in mind while evaluating this,” he adds.
Singh agrees and says, “Companies first must weigh the criticality and the complexity of the job.”
QuEST Global’s Global Head, People Function, Niketh Sundar said, “In the context of the knowledge and technology industry, age is just a number. What matters the most today is the ‘value’ an employee brings to the table and how efficiently they fulfil their duties.”
Scrapping the retirement age could hence be considered as an option but it must be done keeping in mind the business needs. Also, companies prepared enough to take such a decision.
Scrapping retirement age: Some lessons from Prudential Singapore
Take the case of Prudential Singapore, which was more prepared for scrapping the retirement age because it already had several policies and programs in place to prepare their employees, irrespective of age, to be future-ready.
These ranged from encouraging employees to take up courses in innovation, entrepreneurship, and data analytics to giving them the opportunity to choose to move within the company in different roles. Also, the option and autonomy to work from anywhere, acts as an added benefit.
Prudential Singapore, in an email interaction with People Matters shared, “We are also developing a program to help people past 50 or those beyond retirement age find new work opportunities at Prudential. The intent is to help them extend their careers with flexi-work options.”
The insurance company is holding proactive discussions with staff above 50 to explore how they can help them remain engaged, equipped and excited about their extended careers at Prudential.
HR and business leaders can learn from how Prudential Singapore is preparing their older workforce and preparing itself for the era of 100-year lives and incorporate similar practices, as per their own context.
While the debate around scrapping the retirement age continues, an ageing population remains a challenge for companies. The reality can no longer be ignored and both the organizations and the nations have to now prepare for the era of 100-year lives.
To manage the ageing population, organizations have to create ways for people to have meaningful, productive multi-stage and multidimensional careers. If they don’t seize the opportunity to engage workers across generations, they might lag behind and face potential liability concerns and skill gaps.
As someone aptly said, “You can't retire from being great!”