why increasing the pension age is a business issue

why increasing the pension age is a business issue
Recently we have heard a lot of debate about the merits of lifting the Australian pension age. An age that was set in the early 20th century when most workers were not expected to live long enough to collect their pension. However, now as we are expected to live much longer, the demand this will place on the current scheme means government is forced to look at lifting the age, as it simply can not afford to keep us in retirement at the current threshold.

Whilst this has created much conjecture about the merits of such a move, I find it interesting that the debate misses making an important point. This is that keeping workers in the workforce longer is not only a critical issue for government; it is also a critical issue for business.

It is true that we have an aging population but so what? Governments will find new ways to fund pensions and increasing levels of superannuation will support large parts of Gen X’s retirement. However the problem in Australia is bigger than the financial impact of supporting an aged pension scheme, it is about having enough workers to meet business demand.

In Australia our birth rate has been in decline since the early 1960’s to the point where we now have less school leavers entering the workforce than retirees exiting it and with a conservative approach to immigration we are faced with a looming crisis…. we simply won’t have enough workers to fill the jobs we will have.

So we either need to lift immigration levels, which in the current political climate seems unlikely or businesses need to find ways to engage older workers in the workforce for longer.

This presents a further dilemma as the recent Randstad Award research shows that the majority of Australians consider their ideal retirement age is 57. Bad news for the government who are trying to “sell” the increase in pension age but more importantly this is bad news for employers.

However there is some reason to be optimistic. These same Australians do not see retirement as a full stop after 40 years in the workforce. They want to remain engaged in someway and still want to contribute, just not on a full time basis.

Workplace flexibility are key words in their vocabularies as they plan a retirement that may still include work.

To retain this talent companies will need to be able to offer less hours and more flexible work arrangements such as working more remotely or training and mentoring younger employees.

The “temp” once seen as office intern will be an essential business asset characterized by senior employees with a broad range of skills from the factory floor to the boardroom. These older workers still have a lot to give, they just don’t want to give it all the time and the organisation’s that can harness their experience while providing the flexibility in retirement that they are looking for will retain a workforce rich in experience, that will be essential to the future success of those businesses.

So forget the debate on pension funding. Retaining and engaging older talent is a business necessity. And while governments work on pension funding, employers need to build a strong recruitment and retention strategy that provides them with a mature age flexible skilled workforce and their employees with flexible retirement options.

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Steve Shepherd is the Group Director and Employment Analyst at Randstad, a Fortune Global 500 Company and one of the world’s largest recruitment & HR services specialists. Spanning over 40 countries, the Randstad Group employs over 550,000 people every day with the aim of ‘shaping the world of work’.

Randstad is passionate about matching people with organisations, as when the right people are in place, it can create enormous potential and business opportunities.
Posted: Saturday, 12 July 2014 - 4:52 PM