Over a third of the retiree respondents to the survey stated that, in hindsight, they would have retired later. More would have considered delaying retirement if their employer had offered inducements such as phased retirement. In the United States, mandatory retirement was abolished in 1986. Now, twice as many Americans aged 65 to 69 remain in the workforce as do Canadians, although other factors such as the availability of health care benefits may play a part in that difference. All this is good news for employers who will need those experienced employees to help them through the transition to a smaller and less expert workforce. The retiree responses suggest that employers would have considerable leverage if they wanted to encourage older employees to delay retirement. At the same time, it’s good news for employers transitioning away from mandatory retirement, because the numbers show that two-thirds of employees want to retire by age 65, or need to do so for health reasons. The remaining third may be a potential source of expert labour, but the numbers are unlikely to be so large as to disrupt the workplace or make it impossible for employers to adapt. Adjusting To the Change: Benefits For employers not currently experiencing labour shortages, and who are used to mandatory retirement but who now will need to discard that policy, adjustments will be in order. Since many of those employers are in Ontario, where mandatory retirement will soon be forbidden, the discussion below focuses on Ontario. Three key areas of concern for employers making the transition from mandatory retirement are: benefits costs, including the availability of statutory benefits; performance management; and severance costs. Ontario’s Employment Standards Act, 2000 allows distinctions within benefit programs based on age, gender and marital status, in certain situations. This can be extremely helpful to employers in controlling benefits costs, as it can allow them to tailor coverage and benefit levels to an employee’s age. However, a drastic change in coverage before and after age 65 might be treated as a breach of employment contract amounting to dismissal in some cases; caution and lots of advance notice will likely be needed. For this and other reasons, flexible benefits plans may be a better option, as they allow employees to choose the benefits and coverage levels most suitable for them, often at a more controlled cost to the employer. Employers who already provide benefits continuation for retirees will face minimal cost impact by providing benefits coverage for employees beyond age 65, since they are already doing so under their retiree plan. Otherwise, the cost impact of continuing benefits coverage past age 65 depends on the type of benefit being considered. Extended Health & Drug Insurance: Adding coverage for employees beyond age 65 will increase costs, and the cost impact will continue to increase the more an employee’s age increases beyond age 65. Although the Ontario Drug Benefit Program (ODB) provides drug coverage for those age 65 and over, which currently reduces employers’ costs for older workers, the Ontario government has announced its intention to become the second payer for ”working seniors with private insurance plans.“ If that intention becomes fact, it would mean that those who work beyond age 65 will not be entitled to ODB coverage as long as they have private drug coverage through their employment. |
