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are Flexible Friends
You will probably be getting used to the idea of having to work till you drop off your perch. But don't expect any help from the boss. While asserting their keenness to accommodate us and our Zimmers in our twilight years, few employers are actually doing anything about it.
Only one-third of them are identifying and addressing employees' changing needs throughout their working lives with flexible work patterns and tailored benefits packages. This is the finding of Generation Flex, a study of 190 organizations and nearly 300 employees in the UK and Ireland.
It's not that employers have not twigged that the workforce is ageing: four-fifths acknowledged as much. Sam Mercer of the Employers' Forum on Age, co-publisher of the report, says: "They're beginning to recognize that they've got to do something but haven't figured out what. People are being cagey."
They certainly are. Few big companies are willing to discuss their plans for making it worthwhile, pension-wise, for people to work on.
Duncan Brown, assistant director-general of the Chartered Institute of Personnel and Development, says: "Companies haven't thought much about flexible retirement in the past but some are beginning to make the link with flexible working and flexible benefits."
If they get their act together, the signs are hopeful. Though most of us would like to escape the rat race early, nearly four-fifths of those surveyed in the report - 40% aged 40-50 and 40% aged 50-plus - were prepared to stay on if offered flexible work options and benefits that maximized their pensions.
Sally Davis, director of career consultancy Penna Sanders & Sidney, which co-published the survey, says: "A large dose of reality is setting in on the part of employees."
At least there are a few small signs of ageism receding. We will no doubt all take heart from the news that workers are now perceived as over the hill at 49. A few years ago, it was 42.
Those companies that are getting to grips with the issue see it as a way of retaining experienced staff with valuable skills - and of combating the impending shortage of young people.
The Employers' Forum on Age reports two clear policy trends - raising or abolishing the maximum or mandatory retirement age, and introducing pre-retirement work patterns such as part-time work, job shares, downshifting and sabbaticals.
BT introduced a flexible retirement policy 18 months ago, having realised that its average retirement age of 52 was "unsustainable". It says it now sees its normal retirement age (NRA) of 60 as "a focal point around which people can plan their careers".
Becky Mason, BT's employment policy consultant, says: "Only a few dozen people have asked to stay on post-60 and all have been allowed to stay. Most people retiring will be on a final salary scheme so there isn't such a great need to stay on."
Those who stay defer their pensions and continue to contribute 6% of salary (BT pays ll.6%), unless they have the maximum 40 years' pensionable service.
"If it's someone we particularly want to retain, we can make additional payments into their pension or pay a lump sum, but it is very much on a 'needs must' basis," says Ms Mason.
BT's final salary scheme was closed to new recruits in April. New staff are offered a money purchase scheme, which will be used to buy an annuity. They contribute 4%-15% of salary, which BT will match up to a maximum of 10%.
Employers tend to put less cash into money purchase schemes, cutting contributions from around 15% to 10%, the Association of British Insurers has said.
BT allows people approaching retirement to gradually reduce their working hours or responsibility. On reduced hours, pension credits accrue pro rata at the full-time level for the job. Those moving to a lower grade and salary take the best 12-month period during the past three or 10 years, depending on when they joined the scheme, to calculate their pension.
"A lot of people may not want to do that because it will affect their pension, so there hasn't been much take-up," says Ms Mason.
BT admits that it has yet to address making all the policy options financially attractive. It speaks of employees' unrealistic expectations, expressing "concern that line managers may face difficulties in offering all options to all employees".
It points out those who wind down could lose medical cover and other benefits. Ms Mason says: "We try to be very upfront. It's not about a Utopia; the choice carries implications."
Like many other employers, BT is critical of the Inland Revenue rule that prohibits staying on with the same firm while drawing its occupational pension. (Those who joined their schemes before 1989 are exempt from the rule and may do both, once they reach the company's NRA.)
There is some leeway for those who joined schemes post-1989. If you are in this group you may return and keep drawing your occupational pension, provided you do work that is sufficiently different from your old job and have been away for a sufficient amount of time. The difficulty is that the Revenue is not defining what that means exactly, and takes each case on its merit. So extreme caution is needed.
Among the financial insti tutions, Royal Bank of Scotland is planning a flexible retirement policy. But the bank admits that it has a long way to go, seeing as "a major barrier" the attitudes and culture of a company where the average age of employee is 27.
HBOS is reviewing its flexible retirement policy, and is considering an upper age limit of 70.
Nationwide lets people continue working until the age of 70 with an open-ended contract, although its NRA remains 60. "Employees moving on to this new working arrangement will retain their holiday entitlement, loyalty payments and sick pay," it says.
It recently tied pensions for its new recruits to their average pay, but retained the link with the final salary for members already in the scheme.
Those who work on past the NRA (and who were not in the scheme before 1989) can defer their pensions and continue to contribute 5% (while the company pays 19.1% for those in the final salary scheme and 12.6% for those in the new scheme).
Nationwide also adds 5% of the individual's fund per annum to the pension pot. If employees defer the pension but cease contributing, the company adds 9% for every additional year of service.
Those who work part-time as they approach retirement are paid pro rata the full-time salary for that job. Pension contributions are paid on the same percentages as for full-timers. If someone worked half-time for one year, that would count as half a year, with the pension worked out at the higher previous salary.
Those who go to a lower-paid job could lose out because the pension would be based on the salary for that job. In the new scheme, because pensions are based on average salary, the amount earned in the final years is of less importance.
Deborah Cooper, a senior actuary at Mercer Human Resource Consultancy, says there is a growing trend among employers to ask staff in final salary schemes to increase their contributions. "For some people that might be the best option, depending on their age, level of contribution and future salary expectations," she says.
Marks & Spencer's NRA is either 58 or 65, depending upon the scheme to which the employee belongs. The company's several flexible work options include career and dependency breaks and term time-working.
Mark Watson, employment policy adviser, says: "Sixty per cent of the workforce is part-time and paid hourly - at the same rate as a full-timer."
The M&S final salary scheme closed to new members in April. Staff in the company's new money purchase scheme contribute 3%-6% of salary, which the company doubles. M&S staff can retire from 50 but would lose out on their pensions. Mr. Watson says: "All employees may apply to continue working beyond the NRA, and will be allowed to do so if there are vacancies at their chosen store."
Indeed, the National Association of Pension Funds' annual survey for 2001 shows that almost all of their members allow people to work beyond the company NRA. Two-thirds defer the pension and add to the fund at a rate determined by their actuaries; one-third continue with the usual payments by both employer and employee.
However, Brian Freake, pensions officer at Amicus, the trade union, says: "That just means the scheme allows people to work on - but only the ones the employer wants. The flexibility works one way only. Late retirement is at the discretion of employers and most just take the few they're short of at that time - so it's not a choice for employees at all."
Mr Freake's experience ex tends to the public sector. While the NHS pension may look good to outsiders, given that it is secure and not ungenerous, he says it fails the flexibility test in many ways. Attempts to step down from a high pressure job to one on a lower grade scale, or take a part-time job are punished.
The rush of nurses returning to the health service are also facing an uphill struggle building their pensions again. Flexibility is championed by the government if it means bringing back workers who left to look after a family, but is not matched by the pension rules.
Little progress has been made, says the union, despite some discussions to resolve the situation. Mr. Freake says: "We're disappointed that the NHS Pensions Agency, which runs the scheme, has apparently backed out of our discussions. Fourteen months ago it promised another meeting soon. We're still waiting."
The NHS Pensions Agency says a delayed report will be with the Department for Work and Pensions "any time soon".
Back in the private sector, the theme is the same. Change the pattern of your work and it can be not only your wages that go down, but also your pension and eligibility for other benefits. For every BT, there are 100 employers that have yet to recognize the demands for flexible working in later life.
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