Baby boomers are saying they plan to work longer. This can be good or bad news. Many companies can benefit from keeping their mature workers (the baby boomers) longer; others will need to ensure these employees are leaving when they need them to.

In 2014, Statistics Canada reported boomers currently make up about one-third of the Canadian workforce. However, the youngest boomers are now 53 and the oldest are approaching 70, so many could and will retire in the coming years. Generation X is a much smaller cohort, so it won’t be able to fill the boomer gap. The large group of millennials may be able to fill it…maybe.

Millennials (almost 45% of the workforce) and their approach to work/life integration will bring companies tremendous opportunities (opportunities not enough companies are yet embracing). Millennials are idealistic and group-oriented—they want to make a difference to the world and they grew up with information at their fingertips. However, many aren’t interested in working for large companies— according to the Intelligence Group’s Cassandra Report, 57% of them would rather work freelance than nine to five, and 55% would rather work for a start-up than in a corporate environment— so counting on them to fill the older boomer gap isn’t a reliable strategy.

With this in mind, it makes sense for employers to start looking at what this might mean for their companies. And many are going to find that they need to start thinking about how to keep their boomers working longer.

Shifting Views

Towers Watson’s 2014 Global Benefits Attitudes Study shows 32% of Canadians expect to retire after age 65, and 16% after age 70. Interestingly, in the U.S., these numbers are much higher—likely because of their much higher out-of-pocket healthcare costs—with 50% expecting to retire after 65 and 32% after 70.

In 1966, when the CPP was introduced, the average Canadian male lived 68 years. Today, the average is over 80, but most people still have age 65 hard-wired as being the end point of their careers. For many, not only might retirement at 65 not be financially feasible, but their continued physical and mental health will allow them to keep contributing in a material way to the economy and to their companies.

And many boomers dreamed of retiring even earlier, figuring they’d worked hard enough. The idea of freedom resonates with this cohort, and Towers Watson research shows boomers are telling their employers they’re looking for more flexible work arrangements and a meaningful role to play within their companies.

Pension and benefits programs aren’t set up to provide for these options. And, in many companies, the culture to make this work is not there either. But companies can change this.

Employer Moves

What can employers do? The answer depends on the specific needs of the company. But here are a few tips:

Help employees be financially ready to retire. If a company needs mature workers to stay past normal retirement age, it has to ensure employees stay because they want to, not because they need to. They’re not productive if they feel the only reason they report to work is because they can’t afford to retire.

So your retirement and savings programs have an important role to play. Are your plans meeting their objectives? Are you communicating them in a way that engages employees in planning for retirement? Companies also must stop communicating about retirement using long booklets filled with legalese.

A more successful approach is to base the discussion on age. Using pension and savings information from its plan, an employer can calculate the age at which each employee will have the financial resources to retire. Telling someone he or she will be able to retire at age 75 is more likely to get his or her attention. It’s a simple number everyone can understand.

Use analytics. Pension and benefits practitioners have data that can be valuable to companies. For example, data can show what proportion of their employees are eligible to retire today and within the next five years. Or it can indicate if certain parts of the business are more at risk than others. A company must ask, Based on the current workforce, is our company at risk if we do nothing?

One company with employees in a remote area identified that almost 50% of its workforce would be eligible to retire within the next five years. In a market where there wasn’t a big labour pool to draw from, this information was critical so that plans could be put in place to avoid any business disruption.

Talk to business partners. How is the business changing, and how will this impact the number and types of employees? Does the company need to hire people with different skill sets than what its current workforce possesses? This can affect the decision about whether to keep mature workers on the job or let them retire. And the answer will likely be different for different segments of a company’s employee population. For example, one specific set of roles may be in high demand and difficult to replace (e.g., engineers or IT resources), and another set may not be needed in the future.

Transitional Retirement

If you’re a company that needs mature workers to stay longer, consider implementing a transitional retirement program.

Traditionally, phased retirement has been seen as a program in which employees will receive a portion of their monthly pension and also continue to earn some income. Pension legislation in many jurisdictions doesn’t make this easy for DB plan sponsors, since many provinces haven’t yet passed legislation to allow it. But, with a majority of Canadian employers now offering either a DC plan or no plan at all, we need to think about this in a broader way. Some companies have started to implement formalized transitional retirement programs.

Transitional retirement programs allow employees to transition into retirement over a set time period (typically, one to five years). It’s voluntary, and the employees get flexibility, continued pay and benefits, and the opportunity to mentor younger employees; in the meantime, the employer gets greater predictability regarding when employees will retire, reduced risk and more effective knowledge transfer.

These programs can only be successful if employers recognize that a change in behaviours (e.g., creating a culture of trust) across companies is required to make the program, and business, successful.

Done right, transitional retirement programs benefit everyone, and mature employees may even embrace the program and help out.


When a technology company recently looked at the composition of its workforce, it found more than 35% of its employees would be eligible to retire in the next five years. Given its growth projections, and a couple of big projects planned for the next two years, this posed a significant risk to the business.

And, almost 40% of its employees had less than five years of service.

To ensure business continuity, the company implemented a transitional retirement program. The voluntary program had a number of components:

  • employees in business-critical divisions would receive 70% of their pay for working 60% of the workweek;
  • benefits coverage was provided at full-time levels, including a continuation of employer contributions to the DC plan;
  • eligible employees had to work in a business-critical division, have satisfactory performance ratings and meet age and service requirements: 30 years of service, age 55 with 15 years of service, or age 60 with five years of service; and
  • employees must retire at the end of the two-year period.

This program let the company better gauge the timing and number of upcoming retirements, and provided better predictability to the business.

To ensure success, the employer focused on the following:

  • A formalized knowledge transfer that partnered retiring employees with younger workers. Those leaving felt they were adding meaningful value.
  • A change management approach to get leadership buy-in, and manager training that gave managers time to understand the business objectives of the program. They were provided with the tools they needed, clear and compelling communication, and targeted, measured success criteria, including the following:
    • take-up rates for the program;
    • business continuity measures (were critical projects covered?);
    • knowledge transfer stats (were younger employees getting more opportunities to develop faster?);
    • manager feedback (did they feel they were given enough support to make the program a success?).

Ofelia Isabel is the global account director with Towers Watson.

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Copyright © 2021 Transcontinental Media G.P. This article first appeared in Benefits Canada.

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