How can benefits support age diversity in the workplace?

age diversity

Need to know

As the UK population ages, supporting older employees in the workplace will become a more prominent issue.
A benefits strategy does not necessarily need to be age-specific, but can focus on an employee’s life stage to have a bigger impact.
Benefits such as flexible working, health and wellbeing initiatives, and phased retirement advice can help support age diversity in the workplace.

Age diversity in the workplace is an issue that is always on an employer’s agenda; whether it is assessing how best to attract and retain skilled graduates, or how to reward long service and commitment to an organisation, multi-generational workforces are now the norm.

But while at one end of the age spectrum employers face challenges such as engaging younger employees with retirement savings, at the other end, they face a fine balancing act of either retaining employees with a wealth of skills and knowledge in the workplace, or helping them plan effectively for retirement and leaving employment.

A growing issueSupporting an ageing workforce is an issue that the government is strongly promoting. In February 2017, the government published details of its Fuller working lives report, a publication that extols the benefits of employees staying in work for longer, such as the impact appropriate work can have on an individual's financial, physical and mental health. It also outlines the opportunities that an ageing workforce presents to employers, including knowledge and skills retention. In its Overview of the UK population report, published in March 2017, The Office for National Statistics (ONS) reports that an ageing workforce could result in there being fewer people of working age to support those of pensionable age.

It is essential for employers to address this issue, says Rachael Saunders, age at work director at Business in the Community (BITC). “It’s partly because with an ageing population, to have access to the right skills and knowledge that [an employer] is going to need in [its] organisation, [it] needs to be drawing from the talent pool of older workers,” she explains.

The BITC age at work leadership team, led by Andy Briggs, chief executive officer at Aviva UK, has launched a target for UK organisations to employ one million more employees aged 50 to 69 by 2022, which will bring the number to 10 million. In May, Briggs, the government’s business champion for older workers, called on UK employers to publish their workforce age data and to publicly commit to employing 12% more older workers by 2022.

Age diversity has been on employers’ agendas for the last few years but is something of a double-edged sword. Many older workers have spent, in some circumstances, a significant percentage of their working lives as a member of a defined contribution (DC) pension scheme, so the ability for those older workers to move on with their retirement could be restricted. And with older workers in place, younger employees could be prevented from rising through the ranks. Alex Tullett, head of benefits strategy at Capita Employee Benefits, says: “The question then turns to how best to utilise the skills and collected knowledge of those older individuals, as well as providing them with support and benefits. When looking at age diversity, looking at the older generation in isolation is actually quite difficult because the older generation has an impact on the younger.”

Supporting older employeesRather than tailor a benefits strategy according to age group, many employers will focus on particular events during an employee’s life. “We use a lot of analytics around age but also the life stage of individuals," says Tullett. "Just because somebody’s [older] doesn’t mean they’re not interested in going to the gym or having a bike. [We] can’t be a generalist and say that benefits of a certain type, health, retirement, gym, etcetera, applies to a certain age group.”

Instead, the larger indicators of benefits choice centre around whether someone is married or in a long-term relationship, or whether or not they have children, adds Tullett.

At different life stages, an employee will have different draws and drains on their financial and time resources, which will affect the types of benefits they are interested in. “Of course, as people get older they are more interested in pensions because they need to figure out what they are going to do in the next phase of their working life,” says Tullett.

This phase could see an employee moving on through phased retirement or taking a second job, rather than a complete cessation of work. Alternatively, older workers may request to work flexibly or reduced hours rather than full time. Chris Horlick, distribution director at Axa PPP Healthcare, says: “Increasingly, employers are going to have to look at all of those things: working practices, working conditions, access to work. As society ages I would urge employers to grasp this one early so that they’re not left behind. There’s a whole range of factors that could be in play here, not just change of a benefits structure: the physical workplace, access to and from work, can people work remotely, all the things that are typically discussed, but we will see it come to the fore and become a reality really soon.”

Some of the main things that push older employees out of work are health issues, caring responsibilities or redundancy, but an employer can support an individual with these, says BITC's Saunders. In his final Independent review of the state pension age: smoothing the transition, published in March 2017, John Cridland promoted the idea of a mid-life MOT to encourage people to take stock of what they want to do in the coming years, considering career expectations, ambitions, work-life balance, and financial choices.

Many employers do support a mid-life career review within their organisations. For example, Aviva is piloting a scheme to its own employees. Laurence Beckett, HR director at Aviva, says: “We’re essentially talking to [employees] who are 50 or approaching 50, about, potentially, they could have another 10, 15 or 20 more years in the workplace. What do [they] want the second half of [their] career to look like?”

In the department that pilots the mid-life career reviews, 30% of the employees are over 50, explains Beckett. “[That department] has a real business need to understand whether [it] is going to lose 30% of [its] employees in the next five years. They’ll not all want to retire at 55 but many will have a realistic option where they could potentially afford to retire. That could be a massive brain drain for our business in that area.”

In addition to the career reviews, Aviva has a number of pilot schemes in place to support employees working for longer. It surveyed its employees aged 50 and over at the beginning of 2016 and conducted focus groups in April 2016 to find out how it feels to be over 50 and in the workplace at Aviva. It is also taking a different approach to recruitment: it advertised on a database of individuals over 50 who are looking for work.

Aviva also launched a carers pilot in November 2016 because the focus group showed that there was a growing need to support employees that have caring responsibilities. The pilot includes carer’s leave, line manager training, and online resources to help carers at work.

While there are many benefits and support schemes to both encourage older employees back into work and also to retain them within organisations, benefits do not need to be specifically age-related because circumstances, such as caring responsibilities, are not unique to those aged over 50. “The ageing population presents issues not just for older workers but for the ‘sandwich’ [employees], so there’s a retention issue for [employers],” says Axa PPP’s Horlick.

Additionally, benefits such as healthcare and financial protection are not necessarily age-specific, but can be communicated in a way that is relevant to an employee’s life stage. Katharine Moxham, spokesperson for industry body Group Risk Development (Grid), says: “Everybody needs to be able to have an income. Younger generations might not have built savings, older generations have many demands on their income, from cars to mortgages, children, eldercare, savings for retirement. Everyone needs that way of protecting their household finances from illness, or death or disability.”

However, in providing a benefits strategy that supports older workers, employers must be careful not to create or perpetuate a stereotype of the employee who is aged 50 plus. “Older workers will have industry experience, they will have experience within [an] organisation that younger workers just won’t have, but they can benefit from,” says Capita’s Tullett. “Harnessing that knowledge and skills will make those who are older feel valued and wanted by an organisation.”