Are you ready for an ageing workforce?

Ready or not, the population will stay in work longer, so employers need a strategy to make the most of this

Are you ready for an ageing workforce?

In brief:

  • Changing pension rules and demographics mean it’s highly likely there will be a greater number of older employees in the workplace and this trend is already starting.
  • The implications for employers include appropriate health benefits, facilities management, flexible arrangements for carers and retraining, as well as looking at options for phased retirement.

As government and employees alike become ever more concerned about attaining a comfortable retirement, a parallel issue is coming into play. Employees over the age of 65 are being persuaded to stay in work longer by a combination of an increasing state pension age, lower pension savings, a longer life expectancy, pension freedoms and the abolition of mandatory retirement ages. Add in a dearth of younger workers and here’s the deal: in the future, there will be more older employees in the workplace.

For employers, the question isn’t whether they should employ a greater number of older people in future, but whether they have prepared effectively for the number of 60 and 70-year-olds who are undoubtedly on their way.

Cause and effect

According to the Office for National Statistics, 18% of the population is over the age of 65 today – but by 2045, this is expected to increase to almost 25%. The proportion  of these older people remaining in the workforce has also started to rise, so that now according to Age UK, there are 1.13 million people aged 65 and over who are classed as economically active.

This segment of the working population has an enormous amount to offer employers. Retaining long-serving employees means keeping the industry-specific knowledge and networks developed over decades in the business. By employing a diverse range of age groups, organisations can also more accurately reflect the demographics of consumers, and meet their needs more appropriately.

Benefits and challenges

It also protects organisations from a recruitment crisis that faces any employer intent on employing only the youngest members of society. According to a 2015 Business in the Community Study, ‘The Missing Million’, 12.5 million jobs will be opened up between 2012 and 2022 through people leaving the workforce, and two million new jobs will be created. However, there will only be seven million new workers entering the workforce – which means that without older people remaining at work, there would be a serious shortfall.

With the benefits of employing older workers, however, come challenges. While every individual is different, age is associated with all kinds of physical changes that don’t improve health – from declining sight and hearing, to reduced muscle strength and a decline in respiratory and cardiovascular functions. A Department for Work and Pensions study in 2014, ‘Fuller Working Lives’, found that almost half of all people aged between 50 and the state pension age have at least one long-term heath condition.

Health benefits

Employers with an older workforce must therefore pay particular attention to health benefits. Guernsey Post, a commercial mail company with over 32% of its workforce over the age of 50, is managing this successfully. The focus is on keeping employees working as long as possible, by ensuring the effective integration of occupational health, in-house physiotherapy, and flexible working policies. Guernsey Post works with trade unions and health professionals to identify possible health problems early on and provide help and support. Those with chronic conditions are referred to occupational health, then hours and duties are adjusted as necessary.

Typically, older people value health benefits much more than their cash-hungry younger counterparts. They don’t have the same kinds of debts and demands on their cash, but self-funding all sorts of things from private medical insurance to life cover becomes more expensive, so where these can be provided by the employer it’s a huge weight off their mind.

Cost implications

Unfortunately, providing benefits such as PMI, critical illness cover and group income protection tends to become more expensive, and more difficult to secure on a group basis, as employees age. As a result, some employers may choose to fund these benefits to age 65 or the state pension age, then offer a top-up into their pension plan to compensate employees for the benefits they forego after this age.

Others will build flexibility into their benefits package, so that each employee can pick the benefits that are most important to them and tailor the package accordingly. An older employee might need to pay more to join the PMI scheme, but may appreciate the benefit enough to make it worthwhile.

Long-term view

The Marmot Review in 2010, Fair Society, Healthy Lives, found that there are large parts of the UK where disability-free life expectancy is below the state pension age. It means that instead of simply providing health benefits later in life, employers need to support staff to lead healthy lifestyles throughout their working lives too – so they stay healthy for longer. This can be achieved through all kinds of strategies from education initiatives, to discounted gym memberships, cycle-to-work schemes, and healthy eating incentives.


Not every older employee wants to ‘slow down’, but physical changes may require a change of workplace design, or an increase in smart working and home working in order to get the best out of each employee. An Age UK study into Older Workers’ Experiences of Flexible Working concluded that: “Home working is particularly prevalent among older workers. Measures by employers to help people work in this way are likely to have the widest reach.”

Older workers may also be keen to reduce the intensity of their working life. They may want to take more holidays, and appreciate the ability to buy and sell days through a flexible benefits package – or take unpaid additional leave.

What are the implications of a phased retirement?

Older employees may also want to opt for phased retirement. This allows them to continue working reduced hours, while simultaneously drawing a pension. This is far more widely available now that pension freedoms have been introduced, but employers need to understand the implications of the trend.

If they can’t offer this flexibility, they may be unable to meet the needs of older workers. And even if they can offer flexible retirement, they need to ensure that any default options are still suitable for those who want to continue working and saving into a pension well into their 60s.

This age group may also be carers

Part of the need for flexibility for this group comes from the fact that in many cases, people in their 60s and 70s are also supporting elderly parents, or a sick partner. This can make it difficult for them to work at all in some circumstances. According to the Department for Work and Pensions 2015 Family Resources Survey, carers are far less likely to be in full-time employment, and far more likely to be either retired or otherwise economically inactive than non-carers.

Rather than losing them from the workforce, flexible working and work/life balance policies and benefits may be the key. Centrica, for example, offers matched time off, so for every half day an employee takes off for caring responsibilities, the company will offer an additional half-day’s leave. This arrangement can last for a defined period of time, as agreed with their manager. Extra time off can also be granted as ‘dependents leave’ or unpaid holiday - and leave longer than a month can be arranged.

Carers can also be supported through workplace education initiatives, with information, seminars and events to help them find the right help for the person they are caring for – whether that’s about their health and wellness, financial matters or legal issues.

Consider retraining

Changes in physical health may also require a change of job function, which may mean retraining. As technology develops at breakneck speed, any employee who works for five decades or more is highly likely to benefit from ongoing training anyway. Employees may therefore be offered broader training as a benefit.

Unfortunately, in many cases, older workers are less likely than their younger counterparts to receive workplace training or to participate in learning. However, where it is offered, some employers have seen striking results. Co-operative Funeral Care offers an apprenticeship in Funeral Operations and Services, and a third of the apprentices it has recruited since the launch of the programme in 2013 have been over the age of 50. Training older employees in the business isn’t something they do just because it’s the right thing, the business is also benefiting from employees with invaluable life experience.

The government has set a target for people working longer. It wants to see a million more 50-70-year-olds in the UK workforce over the next five years - bringing the total to 10 million. Demographic trends means this is highly likely to happen no matter what employers do. The question is whether they can put the support, training, flexibility, and benefits in place to make sure that these million older workers are healthy, engaged and productive.

Saturday 19 August 2017
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