A flexible retirement

The concept of retirement is changing rapidly. “As people live longer and in good health, retirement is becoming a more active life stage, with more people looking for the opportunity to combine work and leisure. Many workers have retired the notion of fully retiring at age 60 or 65,” said Catherine Collinson, executive director of the Aegon Center for Longevity and Retirement (ACLR) and president of the Transamerica Center for Retirement Studies (TCRS).

ACLR in collaboration with TCRS recently released a new report titled “The New Flexible Retirement” (left), which illustrates that today’s workers are expecting to transition into retirement, however, they face a significant obstacle – few employers have employment practices to support them. The report is based on research from the Aegon Retirement Readiness Survey 2015, which comprises 16,000 workers and retirees and presents global trends and profiles of 15 countries including Asia.

Globally, the survey found that 51 percent of all workers now expect to retire at age 65 or later, or not at all. The mindset of working beyond traditional retirement age varies around the world; in Japan, 43 percent of survey respondents aspire to continue working past retirement compared to only 15 percent in France.

More than half (56 percent) of workers globally envision a flexible transition to retirement; with 55 percent of those age 55 and older, and an even higher proportion of younger workers, holding this vision. The most common reasons for continuing to work to some extent in retirement include keeping active, enjoyment of work, and financial-related concerns.

“How workers can successfully extend their working lives is a complex issue. Workers in jobs that involve manual labour may find it difficult to continue in their current profession. Others may encounter workplace biases against older workers,” said Collinson. “Employers play an all-critical role and can make or break workers realising their vision of a flexible retirement.”

Workers indicate that their employers are doing little to help them phase into retirement. The survey found that only 27 percent of workers age 55 and older say their employers offer the opportunity to shift from full-time to part-time working arrangements as they phase into retirement.

Only nine percent of workers age 55 and older say their employer offers retraining opportunities to extend their careers and help them phase into retirement. “Maintaining existing job-related skills and acquiring new ones are important for workers of all ages and especially for older workers who want to work past normal retirement age,” said Collinson. “Employers can do more to help their older employees keep their skills up-to-date.”


Looking at Asia

In Asia, the report covered China, India and Japan. Here are some snippets from the specific countries:

China: The country has announced plans to gradually delay retirement age to 65 years and employers fear that there might be fewer job opportunities for younger people in the future. Also, “increasing the retirement age as a way to offset the cost of people living longer is not shared by everyone, with 39 percent of Chinese respondents saying the retirement age should remain unchanged”, said the report.

India: It is one of the few countries in the study that does not have an official retirement age, however, many public institutions do set official retirement ages, which have recently been increased by between two and five years. “Because Indian households are often multi-generational, there is less of a need for formal pension arrangements, as exemplified by the 52 percent of Indian workers who indicate in our survey that they expect to receive financial support from a family member during retirement. In India, 79 percent of workers expect a flexible transition to retirement, the highest rate among the 15 countries we surveyed,” said the report.

Japan: It is “a unique example of a country in which flexible retirement is more of a reality than an expectation or an aspiration”, said the report. “The need for people to work past retirement age is a necessity for the sustainability of the pension system.” In recent years, the government has implemented reforms such as increasing the formal retirement age from 60 to 65 years for social security pension benefits. Additionally, employers are required to choose one of three options for employees who reach age 60 – increase the retirement age to 65 years; drop the mandated retirement age altogether; or introduce the “continued employment system”, which allows them to offer their employees flexible working arrangements on a yearly contract basis until they reach age 65. The continued employment system is the most preferred option of employers. Despite all these changes, “there remains an opportunity to broaden the scope of flexible work arrangements to embrace working after the age of 65 and enable employees to continue earning”.



Despite the lack of pre-retirement assistance from employers, older workers are nevertheless loyal. Almost half (48 percent) of workers age 55 and older say they feel a strong sense of belonging to their employer and 73 percent say they plan to work with their current employer until they retire, if possible.

“Employers may be overlooking the opportunity to tap into the knowledge, skills, and loyalty of older workers. By adopting business practices to support a flexible retirement, employers can benefit from improved succession planning and the ability to optimise their workforce management,” said Collinson.

The report offered some recommendations, including:

  • Governments should consider reforms to social security benefits that can positively influence workers’ behavior and attitudes to retirement. Examples include increasing the age at which government benefits begin and providing enhanced benefits for those deferring their entitlements.
  • Governments should identify and remove disincentives in social security and workplace retirement plans to working past a fixed retirement age. Examples include the ability to start receiving retirement benefits while continuing to work.
  • Employers can and should promote an ageing-friendly work environment and culture designed such that workers of all ages thrive. Flexible work arrangements and ongoing training help workers maintain a good work-life balance and keep their skills current. Employers should conduct a review to see how changing demographics will affect their workforce and assess the value of retaining older workers as a way of retaining institutional knowledge and address potential labor shortages in the future.

“A clear strategy for promoting the new flexible retirement can benefit workers, employers, and governments in addressing the challenges created by population aging and building retirement systems that are affordable, sustainable, and achievable for all,” concludes Collinson.

Download the report here.




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