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The CIPD, in their 2018 reward management survey, found that 52% of businesses predicted that the ageing population would impact their processes in the next five years.
With today’s ageing population, it is time to devise innovative solutions to address the financial challenges of having an older workforce. What are those financial challenges and how will they affect reward?
As employees are now working for longer, companies will provide employees with salaries for extended amounts of time. This is likely to affect pay strategy across many businesses with employers needing to support older workers while continuing to attract new employees. This will impact starting salaries in businesses, as employers may not have the finances to provide attractive starting salaries for graduates entering the workforce.
However, as the retirement age increases to 66, businesses should re-evaluate their procedures. The retirement landscape is evolving, with less employees working full-time up to retirement. By offering your older employees the opportunity for flexible and part time work until they retire, you can spend less on their salaries. This means you can continue to offer generous and attractive starting salaries.
Since the introduction of auto-enrolment, more employees are saving for life after retirement and with increased minimum contributions, businesses are expected to provide more money to their employees’ pensions.
One of the main problems with auto-enrolment is that it has created a false sense of security. Many individuals believe that their pension scheme membership with automatically provide them with enough finances to live off after they retire. To combat this wrong perspective, it is important to educate employees about their finances and provide them with financial education.
With age comes the increase of the possibility of illness, as the older population are more susceptible to disease and disability. This may affect pay strategy, as employers need to assess their policies around sick pay and other health employee benefits.
Although it is unlikely that all employees will experience health issues, early intervention services such as private medical insurance, employee assistance programmes and health screenings can support employees and get them back to full health quicker. This means they can return to work quickly. These benefits are low-cost and highly beneficial as they can prevent prolonged problems with employees and support them in returning back to employment. It also means that employers can decrease the amount of sick pay their business may have to pay.
Pay strategies will continue to develop so that employers can support their employees. This is because there are many factors to consider with an ageing workforce. To find out more about how Busy Bees Benefits can support your business call us on 0330 333 9100 for a no obligation chat.