AARP Study Debunks Myths, Shows 50+ Workers as a Solid Investment

The AARP has released a study prepared by Towers Perrin for AARP that challenges myths about workers 50 and older and shows that those employees often have productive advantages that make them far more cost-effective than is generally believed. According to the report--"The Business Case for Workers Age 50+: Planning for Tomorrow's Talent Needs in Today's Competitive Environment", there is a common business perception that 50+ workers "cost more" than younger workers, but that "the extra per-employee total compensation cost of retaining or attracting more 50+ workers ranges from negligible to three percent in key industries" and "older workers are more motivated to exceed expectations on the job than younger workers." Furthermore, in the case of hiring more older workers, "average age-based total compensation cost differences are negligible and hover around one percent per year for the four positions examined."

Source: News Release AARP (December 21, 2005)

Legislation Introduced To Foster Employment of Workers Forgoing Retirement

Senator Herb Kohl (D-WI) has introduced legislation aimed at expanding opportunities for older Americans and baby boomers to work longer if they so choose. The bill is designed to address problems faced by workers who decide to forgo retirement and businesses who seek to retain the experience of older workers and curb a major workforce drain as seventy-seven million people quickly approach retirement age. The legislation, the Older Worker Opportunity Act of 2005 (S. 1826), is co-sponsored by Senator Richard Durbin (D-IL) and would:

Establish a tax credit to employers who offer flexible or phased work to older workers and protect them from health insurance or pension loss; Extend COBRA health coverage for older workers who lose health coverage due to reduction in work hours; Provide a tax credit for the eldercare of a loved one; Improve access to employment and training services funded under the Workforce Investment Act; Create a Federal Task Force on Older Workers through the Department of Labor in order to examine additional barriers faced by older workers and develop ongoing solutions that are helpful to both businesses and older workers.

Source: News Release U.S. Senator Herb Kohl (October 8, 2005)

New Reports Offer Comprehensive Analyses of Demographics and Working Situations of Older Workers

Two new reports have been released by The Center on Aging and Work/Workplace Flexibility at Boston College and Families and Work Institute based on data from the Families and Work Institute's National Study of the Changing Workforce. The reports were released to coincide with the White House Conference on Aging, which will make recommendations to Congress and the President about issues facing the aging workforce. The first report--"Context Matters: Insights about Older Workers from the National Study of the Changing Workforce"--found that older workers are more likely to continue working when they have more control over their work hours, workplace flexibility, job autonomy and learning opportunities. The second report--"The Diverse Employment Experiences of Older Men and Women in the Workforce"--found that female workers over the age of 50 are at a distinct disadvantage to older male workers in that they earn substantially less than men.

Source: News Release The Center on Aging and Work/Workplace Flexibility (December 12, 2005)

Putnam Study Shows Many Retirees Reentering Workforce

Putnam Investments has released the results of a survey--“The Working Retired: Well Educated, High Income, but They Don’t Own Their Homes"--that shows that about 7 million previously retired Americans have returned to work for pay after an average sabbatical of one-and-a-half years. Most are in a job requiring at least the same skill and experience levels as their prior position. Putnam’s research was based on a national survey of 1,726 retirees who are working; they have an average age of 61. Of the respondents, most (54%) retirees work part time, 36% work full time, and the remaining 10% are looking for work; in addition, two-thirds said they planned to return to work following their first retirement.

Source: Press Release Putnam Investments (December 8, 2005)

Employers Opting to Maintain Retiree Drug Coverage for 2006

Most businesses (79%) that now provide retiree health benefits will accept government subsidies for continuing to provide retiree drug coverage at least as good as Medicare’s coverage when the new drug benefit starts in 2006, according to a new survey by the Kaiser Family Foundation and Hewitt Associates. According to the report--Prospects for Retiree Health Benefits as Medicare Drug Coverage Begins: Findings from the Kaiser/Hewitt 2005 Survey on Retiree Health Benefits, another 10% say that they will provide some drug coverage to supplement the new Medicare benefit, and 9% say that they plan to stop offering drug coverage to Medicare-eligible retirees.

“For many reasons, taking the retiree drug subsidy is the strategy of choice for large companies in 2006, but they will continue to reassess their strategies moving forward as more experience develops with Medicare drug plans,” said Frank McArdle, manager of Hewitt’s Washington, D.C., research office. “Unfortunately, retiree health cost pressures remain intense.”

In addition to providing more detail about employer policies affecting prescription drug coverage, the study shows that surveyed firms report an average increase of 10 percent in total retiree health costs between 2004 and 2005, including both Medicare-eligible retirees and early retirees (under age 65) who do not qualify for Medicare benefits. About one in eight surveyed firms (12%) say that they had stopped offering subsidized retiree health benefits in 2005 for future retirees, mainly newly hired workers.

Source: News Release Kaiser Family Foundation (December 7, 2005)

United Kingdon: Pensions Commission Recommends Raising Retirement Age and Other Reforms

The United Kingdon Pensions Commission has issued its report A New Pensions Settlement for the 21st Century with recommendations to increase the retirement age gradually to age 68 and to implement an integrated set of policies that can ensure that increasing life expectancy becomes not a problem but an opportunity for everyone. Key proposals from the Pensions Commission’s report include:

• The establishment of a National Pensions Saving Scheme into which all employees without good existing provision would be automatically enrolled but with the right to opt out.
  
• Reforms to the state system to ensure a sound foundation on which pension saving can build.
  
• Measures to improve the position of people with interrupted work records and caring responsibilities, who are disadvantaged by the existing contributory system.
  
• Measures to facilitate later working and flexible retirement for those who want it.

Other resources available online include the text and slides of Lord Adair Turner's presentation.

Source: Press Release The UK Pensions Commission November 30, 2005