Phased Retirement: A Tool of Your Employee Benefits Systems?
Modulate from full-time to part-time to no work at all. These stages constitute phased retirement. Workers “cut back but they don’t cut out.” The phases are financially advantageous in that employees can begin adjusting to reduced incomes. Within typical employee benefits systems, the transition fosters psychological sinew because it gives career-folks the chance to explore identities outside the workplace.
Employers usually permit a phased departure as an informal agreement, often outside the page of the formal employee benefits systems. The option bides most prevalently in establishments that have been flexible all along—those that welcome part-timers, allow job sharing, and promote flextime.
Expect Congress and the Internal Revenue Service, eventually, to support phased retirement programs that allow retiring workers to collect pensions while remaining on the job. Such legislation and IRS regulations would more neatly fold phased retirement in the corporate employee benefits systems.
Barriers to Phased Retirement
Phased retirement can be a good tool of employee benefits systems, but barriers make it virtually impossible to design any formal phased retirement programs that are compliant with current laws and regulations and workable for all companies within all industries.
According to Tomeka Hill, writing in Benefits Quarterly, two types of barriers prevent the institutionalization of phased retirement within employee benefits systems.
The first type arises from current laws and regulations over employee benefits systems, such as those applying to employee benefits, age discrimination, and nondiscrimination standards.
The second type pertains to company-specific issues, such as the structure of jobs, the culture of the workforce planning system, the type of employees, and the company organization.
Hill, who has conducted lifelong research on the subject, concludes that retail, financial services, and health-care industries are the best suited for formal phased retirement.
Employee Benefits Survey from the Society for Human Resources Management
The use of phased retirement programs among U.S. companies appears to be waning, That’s the conclusion to draw from the Society for Human Resources Management's 2010 Employee Benefits survey. The Society’s report points out that only 6 percent of U.S. companies operate formal phased retirement programs as part of their workforce planning system, down from 13 percent in 2006.
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