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Survey Report

Retirement age flexibility - Ireland survey results

Retirement|Global Benefits Management
N/A

March 4, 2019

Willis Towers Watson recently carried out a survey of companies on their response to retirement age flexibility. The survey was carried out against the background of significant developments in this area.

Willis Towers Watson recently carried out a survey of companies on their response to retirement age flexibility. The survey was carried out against the background of significant developments in this area including:

  • Changes to the State Pension Age
  • An increasing number of cases being brought forward to the Workplace Relations Commission (WRC) on age discrimination
  • The WRC issuing guidance on retirement age flexibility
  • The newly introduced option for public servants to work until age 70
  • The Government’s 2018 Pensions Roadmap recommendation of additional flexibility in this area

The survey was fielded during December 2018 and January 2019. We have summarised here the responses received from 136 companies over a range of industries, providing an idea of general market practice in this area.

Almost 15% of survey respondents confirmed that they have no Current Contractual Retirement Age (CCRA) in place. This could signal either:

  • Poor governance in relation to managing retirement age expectations in the workforce
  • An extremely flexible retirement age policy with no currently defined retirement age

Only 18% of companies surveyed have adopted a formal policy.

Of those companies that have a defined retirement age, 90% of companies use age 65. This is not surprising and was in line with State Pension Age until it was increased to age 66 in 2014.

Only 18% of companies have adopted a formal policy despite more than 70% of companies having received requests from employees to work beyond CCRA and some 65% of companies having considered retirement age flexibility. We therefore conclude that companies have significant work to do in this area and are mainly behind the curve in terms of what might be seen as best practice. In particular, if companies are to respond to the new WRC Guidelines, a formal policy will be needed to ensure consistency of treatment across the employee base.

Companies enforcing a mandatory retirement age submitted information on the objective justifications that are used with the majority of companies referring to a number of objective justifications.

In terms of companies that have introduced retirement age flexibility for employees to work beyond CCRA, over one third do so through existing contract extensions while another third issue Fixed Term Contracts.

Varied and mixed practice in provision of employee benefits post CCRA – age discriminiation issue.

Some companies have increased retirement age for all employees but this approach has only been taken by fewer than 10% of respondents. For those employers, some 20% have increased retirement age to 66, 36% have aligned with State Pension Age.

Our survey results indicate that there is varied and mixed practice in relation to the continuation of employee benefits post CCRA.

Of those companies that have introduced flexibility and established a policy:

  • Just less than half continue to provide DC pension provision
  • Of those respondents with DB pension plans 25% apply a late retirement factor to benefits already accrued, 25% allow continued DB benefit accrual and circa 50% move the employee to
  • DC pension provision for future benefits
  • 45% cease to provide Death in Service benefit cover
  • 60% cease to provide Disability Benefit cover
  • 43% cease to provide Private Medical Insurance cover

Typically employment law advice that we have seen has recommended the continuation of all employee benefits for employees that continue in employment post CCRA as to do otherwise could leave the employer exposed to age discrimination claims. While an argument can be made to not provide benefits if they are of limited availability, our experience is that insurance companies will provide insured benefits, at least up until State Pension Age.

Willis Towers Watson has assisted many companies in introducing flexible retirement age policies. Our services include a review of workforce demographics, analysis of pension plan and risk benefit provisions and the costings of various options. We also assist in developing communications for employees and implementing pension and insurance policy changes. If you are interested in discussing this topic in further detail please contact me or your regular Willis Towers Watson consultant.  

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