Employers Worry More About Knowledge Drain Than Delayed Retirement

Employers Worry More About Knowledge Drain Than Delayed Retirement

WorlAatWork.com Newsline *

Employers Worry More About Knowledge Drain Than Delayed Retirement *

Dec. 17, 2009 — Employers remain more worried about the impact of the knowledge drain on their businesses than the number of employees who have delayed retirement due to the global financial crisis, according to a new study. *

The MetLife Emerging Retirement Model Study found that 74% of employers are primarily concerned about experiencing a knowledge drain as older workers retire (versus delayed retirement); just 26% said they are primarily concerned about the impact on their overall workforce as older employees delay retirement. According to study results, employers’ concerns are virtually the same when asked to look ahead three to five years: 70% anticipate being primarily concerned about the knowledge drain vs. 30% anticipate being primarily concerned about the impact of delayed retirement. *

“With the Emerging Retirement Model study, we were surprised to find the extent to which the knowledge drain is both a “today” and “tomorrow” issue for employers, even while conventional wisdom might suggest that the effect of workers now delaying retirement — primarily out of financial necessity — could lessen immediate concerns about the knowledge drain,” said Cynthia Mallett, vice president of product and market strategies, corporate benefit funding, MetLife. *

Disconnect Between Worry and Action ***
According to MetLife, despite concerns over the impact of an aging workforce, few employers have taken steps to curtail or even formally assess its impact on their organizations. According to the findings, 97% of those employers concerned about the knowledge drain have not yet calculated the cost to transfer knowledge from older to younger employees. *

“It’s interesting that so few employers are quantifying the cost of, and strategically preparing for, the knowledge drain they’re concerned about — perhaps because they’re uncertain about where to start or they don’t know how to calculate the cost,” Mallett said. *

Benefits Not Viewed as a Strategic Lever to Manage Aging Workforce ***
Eighty-seven percent of employers who are primarily concerned about the impact of delayed retirement said employees are working longer in order to rebuild their retirement nest eggs in light of the recent economic downturn, the study found. Other reasons for delayed retirement include: wanting to work long enough to qualify for Social Security benefits (67%), needing income to meet their day-to-day expenses or pay bills (63%), and wanting to maintain medical coverage until they qualify for Medicare (41%). Only 41% of employers believe their employees stay in the workforce for social reasons — 24% of employers believe their employees enjoy the mental stimulation of work, 12% believe they want to maintain social contact and only 5% say their workers appreciate feeling needed for an assignment. *

Phased Retirement Programs Key to Recalibrated Retirement ***
Some employers are looking more closely at phased retirement programs or portions of phased retirement programs, according to study results. More than one-third (35%) of employers are considering implementing, or have already implemented, phased retirement programs at their organizations. Also, half of employers surveyed offer or plan to offer access to pension benefits to partially retired/partially in-service employees, and many employers are implementing flexible work arrangements to accommodate the aging workforce and manage the knowledge drain. *

More Legislation / Regulatory Guidance Welcome ***
“While recent government legislation — including changes in the Pension Protection Act of 2006 that allow in-service pension distributions at age 62 or older — has helped to make it easier for employers who offer a defined benefit plan to consider phased retirement programs, the design and implementation of phased retirement programs continue to be mostly uncharted territory,” said Kent Mason of Davis & Harman in a MetLife press release about the study. *

Perhaps that’s why most employers (65%) said they would welcome additional legislation/regulation that would encourage the implementation of phased retirement programs. Seven in ten employers (71%), for example, strongly or somewhat agree that regulatory complexities and ambiguities involving federal tax and age discrimination laws impact their organization’s ability to offer a phased retirement program. About half (51%) of employers also strongly or somewhat agree that the retirement plan nondiscrimination rules can be an obstacle to an effective phased retirement program for their organization.

Survey Methodology ***
From August through September 2009, MetLife commissioned Asset International to conduct online surveys with 240 employers from companies with at least 1,000 employees. The respondents consisted of executives who were either the final decision-maker, had a lot of influence or had a moderate amount of influence in the selection of employee benefits and/or retirement benefits that are offered to their organization’s employees. Their titles ranged from owner, CEO, president or chairman, CFO/treasurer, senior vice president, vice president, assistant vice president, and director. Each respondent works for an organization that offers either a defined benefit pension plan (DB) or a defined contribution plan (DC) or both. Finally, respondents came from companies that offer at least two of the following employee benefits where the organization pays some or the entire premium: medical insurance, dental insurance, disability insurance or life insurance. *

Contents © 2009 WorldatWork. No part of this article may be reproduced, excerpted or redistributed in any form without express written permission from WorldatWork.

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http://dreamlearndobecome.blogspot.com This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.