What Support can Employers give to their Retirees?
While speaking on the subject of Retirement at an event organized by one of the major public sector corporations in India, I was pleasantly surprised to see the Chairman and the entire Board of Directors attend the function to felicitate and support the retirees. On hearing the Chairman and several board members speak fondly and with anecdotes of their retiring colleagues I was left with a very positive impression thinking that this was a forward looking and caring organisation, something that I have generally not seen.
Most organisations would host a small departmental party for the retiree and help the person ride off into the sunset. Unless the person is the Chairman of the company who does a “victory lap” to every far flung asset of the organisation anywhere in the country or the world and then flies off into the sunset. The end result is generally the same — the organisation does nothing to help the individual prepare for retirement. This applies to the Government employees, Public sector employees as well as Private sector employees.
The end game is the same though the number of parties or the number of gifts may differ based on how senior or junior the retiree is. From the perspective of the organisation, they have given a “warm farewell” to their colleague while from the perspective of the retiree, the life has changed as he / she comes to the end and stepping of the cliff is imminent. Employers must remember that these retirees have a huge wealth of institutional knowledge and staying connected with them will help the organisation and the future employees in the long term.
So what can organisations do help and support retirees to prepare for life after retirement?
Management of time post retirement is a process of adjustment
Most retirees would have spent two to three decades, working hard for the company without thinking of their personal lives and must have worked 60 hour weeks, compromising holidays and family time. Such people are the classic retirees who will face the most serious challenge on what to do with their time when they stop working.
Some forward looking and caring employers are beginning to introduce a process of progressively slowing down the lives of their employees as they start to reach the age of superannuation.
I was delighted to find that in these companies, in the three years prior to retirement,
· The paid earned leave of an employee is increased by one third of the annual entitlement each year. Therefore, if the annual leave entitlement is 4 weeks, in the third year before retirement, the employee starts to get 5 weeks, in the second year before retirement the leave increases to 6 weeks and in the year of retirement it is 7 weeks. This permits the retiree to internalise what to do with free time and gradually ease himself into his new life.
· Some companies permitted their retirees to move to a flexi time schedule in the last two years before their retirement.
· Other companies allow their retirees to choose their own work timings in the last 6 months before retirement allowing them the time to plan out their personal affairs.
Of course, the option to take extra leave or flexi time is at the option of the retiree. What surprised me was that very few retirees took up these offers, either because of an inherent insecurity about their jobs or because they were not willing to confront the reality of their retirement and kept trying to delay acceptance of the inevitable to the very last day!
Financial and Asset Management
The single biggest source of worry for retirees is whether their savings will be enough to take care of their needs as they retire. It is not enough to say that they should have planned better or that they knew that retirement was inevitable.
Different employees would have planned differently. I have met retirees who have invested a lot of money in buying properties in the belief that they are de-risking themselves against inflation. They are asset rich but cash poor. There are others who have saved money and not even bought their own home in the mistaken belief that they will buy on retirement and when the moment arrives, they suddenly realise that the house will take a significant chunk of their savings.
Employers can play a very significant role in helping their employees plan their finances in their journey to retirement. Enlightened should companies start this process when an employee is five years away from retirement. Getting professional guidance to plan finances would be huge service an employer can provide to their retirees.
Irrespective of how senior or junior an employee maybe, they need help in planning their finances post retirement and most individuals, more particularly their spouses, are not aware of what to expect since they have been used to their monthly pay cheque. A very large cross section of future retirees have never bothered to sit down and take stock of the amount of money they have in their corpus nor have they considered the amount of money they will need to meet monthly expenses post retirement. Employers can select and empanel credible financial consultants and ask them to hold camps during office hours so that future retirees can ask questions that have never been able to before. This would be great start in helping retirees to start their planning process.
Most retirees, who have not invested in buying their home will need help to decide what on the kind of home they can afford based on the current and future cash flows. For those retirees who have purchased their own property, it is important to explain to them the need to keep their home in their own name or that of the spouse and not transfer it to their children as long as one of the two partners is alive. There have been far too many cases of elderly parents being “thrown out” of their homes by their children.
Most people have not bothered to sit down and write their Will. This is another area which needs urgent planning and enlightened employers can assist in the process. Most of us assume that after the primary earner passes away, the wealth will automatically go to the spouse. This is not necessarily true and there are thousands of cases in Court where these matters are under dispute simply because clearly defined Wills were not prepared. It is always a good practice for both spouses must write their Will and keep it away in a Bank locker.
Skilling Post Retirement
Enlightened employers can take several steps to help their retirees to re-skill themselves.
Re-employment in the company — Companies could support those employees who wish to continue working with re-employment offers. This could be in the form of consulting assignments or fixed term contracts. Such options work sometimes though most times, the re-employed retirees resent the fact that people who were junior to them while they were employed are now senior to them and this could lead to conflicts.
Corporate Social Responsibility — Several organisations have large CSR budgets and they can ask their retirees to look after these departments since these retirees have extensive knowledge about the organisation and would protect the interest of the organisation.
NGO’s — Several companies support NGO’s as a part of their annual budgets. Retirees can be encouraged to work with such NGO’s. This process, based on the interest level of the retirees, can start in the last couple of years before an employee retires and can continue well past retirement.
In addition, retirees could also be asked to mentor their successors, beyond the normal “handing over process” that is followed in all organisations.
Not enough work is being done on the state of mind of a retiree though some statistics in the developed world suggest that not more than 15% of the retirees are aware or have planned for life after retirement. For the balance, this new state of life hits them on the first day after retirement. Employers must play a role in assisting their employees cross over to the “other side” of their working life into a long, health and happy retirement.
Organisations spend millions of dollars training their new entrants and retraining their junior and middle management. These training dollars are spent to increase the “bottom line” of the company to increase “returns” to the shareholders. Some of this money can very easily be set aside for preparing and possibly re-skilling employees who have given their life to the organisation.
While the Government and public sector employees and those in a very few private sector companies have a retirement plan in place most retirees do not have access to retirement benefits. Financial and Health related issues are the two most important challenges that retirees have to address. Preparation for retirement should start in the last three years before the date of retirement. The planning must be led by the Human Resources department with the support of the senior leadership.
So what can organisations do help and support retirees to prepare for life after retirement?
Health is always a serious worry for most retirees even if they have enough money. Given the very significant increase in healthcare costs, most retirees wonder whether they have set aside sufficient funds for medical emergencies. This worry gets exacerbated if they retirees not have access to health coverage provided by employers as is done for Government and Public Sector employees.
Employers can play a very major role to assuage these health related fears. Every employee would have gone through a comprehensive pre-employment medical check up to ensure that he will be able to contribute effectively during his employment life with the company. Would it be too unfair to expect the employer to pay for a comprehensive pre-retirement health check for the retiree and the spouse so that they can prepare for their retired life?
Several health insurance policies are now available at reasonable costs but most individuals do not know when to take this coverage or what coverage they should take for themselves and their spouses.
The human resources departments of various employers should counsel retirees to take health cover early enough. If this is done in time, the premium is affordable and risk cover is taken at a time when the employee does not have serious or chronic illnesses. Getting health insurance while working is definitely simpler and more advisable than trying to get it post retirement.
Employers, therefore, need to sit back and think about the huge challenges their employees are confronted with as they start to grapple with this “new normal” called superannuation or retirement. Most employees reaching this new stage of nirvana in their lives don’t know how to tackle this. They have no idea about what is next. And most importantly, they do not know that there is no reason to be worried or scared of the next three decades of their lives.
Retirees, who can see their retirement ahead of them, are also worried about spending their time at home, closed within the four walls of their home with their spouses. They need to be counselled on how they should handle this new relationship with their spouse of over three decades and the process of adjustment they have to go through is probably no different from what they went through as a newly married couple. Some retirees who still have children living at home will need to understand how these next generation folks will react to one of the two “bread winners” spending so much time at home.
Retirees must need to be educated in a formal environment to assure them that there is a life post retirement and it is well beyond simply turning to Almighty God and praying all day, waiting for the inevitable.
Support to Spouses
Since most retirees have worked long hours and stayed away from their family as they built their careers, the impact of retirement is felt very strongly by the spouse. The thought of seeing the husband at home, 24 hours a day, can be intimidating from the perspective of personal freedom and interference in day-to-day household affairs. On the other hand, the spouse also needs to understand the huge changes her spouse will experience once he stops working.
The public sector company I spoke about in Part 1 of this article, had been forward looking and had invited all spouses to the discussion on Retirement. This was to help them to understand the challenges their husbands would face post retirement and also to assist them with in handling the “24 hour companionship” that all of us sign up to when we get married but face it only when we stop working!
Finally, spouses need to understand the family finances, health insurance and other company benefits (if any) and they need to be educated in this area. A simple finance 101, supported by the employer would go a long way to support them,
Employers can and should play a major role in helping their retirees to address their challenges and help them to evolve and implement a robust financial wellness program. Of course, it’s incumbent on retirees to do their fair share in planning for their own retirement.
We have a serious challenge in India regarding preparedness for retirement. The transition from a working life to retired life is difficult and the employers must assist their loyal retirees to prepare for this new phase of life. As India gets older, despite being the youngest nation in the World, we will have to start talking about and preparing for retirement and not leave it as a topic for discussion “when the inevitable happens”.
The author is the founder Chairman of Guardian Pharmacies and the author of 5 best-selling books, Reboot. Reinvent. Rewire: Managing Retirement in the 21st Century; The Corner Office; An Eye for an Eye; The Buck Stops Here — Learnings of a #Startup Entrepreneur and The Buck Stops Here — My Journey from a Manager to an Entrepreneur.
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