Over-50s have increasingly become an innate characteristic of the UK workforce. As business owners observe an increase in the number of older workers remaining in employment for longer, employers need to prepare themselves and their workers for extended working lives. Here’s what an ageing workforce means for small businesses, and what role business owners can play to maximise productivity, whilst preparing all employees for the latter part of their working life.
Workers over 50 already comprise 27 per cent of the workforce in the UK, and by 2020 that number is expected to grow to one-third, according to the Department for Work & Pensions. Due to increased life expectancy and the removal of the mandatory retirement age (in 2011), employers are experiencing an ageing workforce like never before. Many older workers are reluctant to retire voluntarily, often because they have not saved as much as they had hoped to for a comfortable retirement (due to making ill-informed choices regarding savings). Additionally, the revelation that delaying retirement can have positive health benefits has encouraged older generations to stay put in their jobs, contrary to previous research suggesting early retirement leads to a longer life.
But what does this mean for small businesses? Older workers are more experienced, patient and bring expertise to the table, meaning they are perfect for mentoring younger employees. They can make a valuable contribution to the culture and morale of the staff, and are proven to have fewer sick days. Physically, there is little evidence that they are at higher risk of occupational accidents, however, if they do have an accident, their recovery may take longer than that of a younger colleague. This could well be a consideration for those businesses that require a high level of physical activity.
There are many ways that small business owners can embrace the growing proportion of older employees, and maximise the opportunities they bring. This will often require a shift in culture towards a more open dialogue from the outset about lifestyle and forward-planning for retirement. Future plans should be discussed throughout working life, not just before retirement, as this allows employees to make informed choices about their savings (and can also facilitate an open conversation about the optimal retirement age). Helping to plan lifestyle changes, such as increasing levels of physical exercise, can also be advantageous. Investment in training to ensure skills are up to date should not be overlooked for the older generation of workers, nor should the importance of older staff members mentoring younger colleagues.
How can small businesses address retirement planning amongst the workforce? There is currently an acute lack of understanding and education around pensions; many employees are simply unable to make informed choices for their future as they do not have the information they need. According to research commissioned on behalf of the Open University Business School (OUBS) two-thirds (64 per cent) of UK employees have never received personal finance education. The research also finds that, while 81 per cent of employees want personal finance help from their employers, only 7 per cent of those who have received financial education got this from their employer. How to invest their pension, when to retire, and how to start receiving benefits are all questions that employees are looking to address.
Making retirement planning accessible across the business, and listening to the concerns of the workforce is a great way to start. For all employees, young and old, the choices they need to make regarding their pension; how to invest, how much to contribute, and when to retire, can be intimidating. Employers can provide access to help them get a clear picture of the types of choices available and what they will mean for their future. There are many resources available from pension providers, along with guidance provided by Pension Wise, TPAS and Citizens Advice (for those approaching retirement).
Offering tailored expert financial advice should also be considered; it may be more cost-effective than business owners anticipate. Engaging an online advice service (or robo-adviser) can offer employees access to expert financial advice through online web apps or wizards for a fraction of the cost of face-to-face advice.
An ageing workforce certainly has its opportunities for businesses. Employers must overcome any perceived barriers and recognise the value older workers can bring. Preparation of the workforce for retirement is essential throughout working life; access to advice should be offered by businesses to all members of staff (whatever their lifestage). This will help to achieve optimum productivity levels in the workplace, and satisfaction among employees who feel confidence in their chosen retirement plan.
Andrew Firth is chief executive of Wealth Wizards.