Employers See Retirement Planning as Retention Tool

Research by the Center for Retirement Research at Boston College (CRR) suggests employers with a relatively large share of employees wanting to stay past the traditional retirement age are less likely to adopt an individualized retirement planning program.

In its latest Issue Brief, CRR suggests employers primarily view individual retirement planning as a tool for retaining, not retiring, employees. The researchers contend that this suggests that staffing issues, not a disruption of the employer’s retirement process, underlies their interest in this initiative.

CRR’s research also suggests employers have been slow to recognize the personnel management implications of the shift away from traditional pension programs and are interested in retirement-related initiatives in order to attract and retain employees.

CRR says “the presence of a significant ‘retirement challenge’—either a large number of unprepared employees or a large number of employees wanting to stay on the job well past the traditional retirement age—has no significant effect on the encouragement of retirement saving.”

Of four retirement-related initiatives suggested, employers said they were most likely to increase their encouragement of retirement saving. On the likelihood scale from one to 10, the median response was an eight and nearly 30% responded 10.

However, two characteristics, the employer’s expected rate of employment growth and the size of the employernot the retirement challenge—have a statistically significant positive effect on the encouragement of retirement saving, according to the report. The strong association with expected employment growth indicates that employers see the encouragement of retirement saving as an “employee benefit” useful in attracting and retaining workers, the researchers contend.

Employers in the study are generally lukewarm about creating employment opportunities for even half the employees they expect will want to stay on the job two or more years past the traditional retirement age. According to the report, a need to attract and retain workers and the value employers see in older workers makes them more receptive to creating opportunities for workers to stay past their traditional retirement age.

Employers that expect rapid employment growth, and thus need to attract and retain more workers, and employers that have a relatively old workforce that could soon be depleted by retirements or that see older workers as making a positive contribution to the organization’s knowledge base are more likely to create such opportunities. Not surprisingly, employers are less likely to do so if they view older workers as costly or if the older employees in question are rank-and-file as opposed to white-collar workers.

Having a relatively large number of employees wanting to stay on has no significant effect on the likelihood an employer would create opportunities for them. “Neither their employees’ need to work longer (the employees’ retirement challenge) nor potential disruptions to the retirement process (the employer’s retirement challenge) had any significant effect,” the report says.