SEATTLE: In 1889, when Otto von Bismarck, the German chancellor, introduced the first state pension scheme for those over 70, average life expectancy was 45.
Since then, increasing longevity and improved health have led people to extend their working lives and are calling compulsory retirement ages into doubt. As seismic demographic shifts transform the global workforce, companies are asking themselves whether and how they should keep this array of seasoned talent in employment.
“Healthy adult life, which we used to think of as coming to an end some time in our 60s, we’re now seeing extending well into our 70s,” says Sarah Harper, director of the Oxford Institute of Population Aging at Oxford University.
Increased life expectancy is not the only reason people are abandoning retirement in favor of a second career.
For some, financial pressures drive the need to work longer. The ability of governments to fund state pensions is diminishing, and some have raised pension ages. Many baby boomers have not saved sufficiently for retirement and, in addition, investment returns have fallen. This has created a financial imperative to work longer.
Yet for some – particularly senior executives – the need to continue earning is not a consideration. Instead, they simply want to remain engaged in their professional lives.
For companies, this presents opportunities, says Patrick Ghali, managing partner at London-based Sussex Partners, a hedge fund advisory that has been recruiting senior executives in their 50s. He says older workers are “active and they want to continue to do things – and they realize they’re in the prime of their careers”.
Moreover, as companies look to recruit more staff as the economy improves, competition for workers with the right skills means they need to look beyond traditional sources of talent.
Unsurprisingly, Japan, given its rapidly aging population, is spawning innovative approaches. Toyota, the carmaker, is retaining skills and experience by permitting its retiring workers to apply for other jobs.
Of course, hiring or retaining older executives can mean added costs. “It becomes more expensive to insure people against disability,” says Will Aitken, a senior consultant at Towers Watson, a consultancy. “So, there are some knock-on effects that need to be thought through.”
Meanwhile, traditional employment benefits might not appeal to older executives. Instead of pensions benefits, for example, many may “want more flexibility and more autonomy”, says Barney Ely, head of Hays, a recruiter.
While businesses are getting better at accommodating this, Mr Ely argues they are largely responding to demand. “Companies are not driving the agenda,” he says. “They’re having to react, and quickly.”…