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Creativity Becoming a Key With Benefit Plans, Especially for Boomers

July 29, 2011
Related Topics: Retirement/Pensions, Benefit Design and Communication, Featured Article, Compensation
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With nearly a quarter of its workforce becoming eligible for retirement next year, AGL Resources Inc. decided it might lose its competitive edge if those highly skilled workers walked out the door.
Taking a tip from the U.S. military, the Atlanta-based natural gas distribution company created a new strategy: the Retiree Reservist Pool. As of July, current AGL retirees and soon-to-be workers in that category, could sign up for the program, which allows them to collect on their defined benefit pension, contribute to their 401(k), and work a flexible schedule. The program allows AGL to expand and contract its workforce according to business needs.
Creativity Becoming a Key With Benefit Plans
It's a better strategy than hiring new workers for these jobs because bringing in highly skilled trainers to teach new hires is expensive, says Chasity Miller, AGL's managing director of compensation and benefits. That investment might be risky considering how quickly younger workers move from job to job vs. the average 15-year tenure of current AGL workers, Miller says. Plus, AGL plans to use its older workers to train less-skilled employees.
“Due to the highly technical nature of what we do, there are just some things that are retained in the brains of our older workers,” Miller says, adding that 21 percent of AGL's 2,500 employees will be eligible for retirement in 2012. “There are just some things that you are not going to get in a manual.”
With people living longer and many baby boomers not ready to retire, employers like AGL are becoming more creative with their financial benefit plans in retaining top talent, a Bank of America Merrill Lynch Workplace Benefits Report released in June shows.
“I think in days gone by, too often older workers were considered to be disposable by some businesses,” Andy Sieg, head of retirement services for Bank of America Merrill Lynch said in a webinar discussing the report. “The lead finding in this research is that businesses today find older workers to be indispensible in terms of thinking about the growth and success of their business over time.”
The study, which included responses from 650 C-level executives, shows 94 percent of employers say it's important to keep older employees past their retirement date, mostly because of their institutional knowledge, skill set and ability to train new employees.
“As the workforce ages, there is a tremendous need to retain the institutional knowledge that [older workers] have developed over 20 to 30 years,” says Steve Ulian, Bank of America Merrill Lynch's head of institutional retirement and benefit solutions. “They are the lifeline of the company.”
To keep older workers at their jobs, half of employers surveyed say they are creating flexible or customized work schedules for older workers; more than a third are offering education around retirement income and health care.
“Employers are recognizing that A: ‘There is a need' and B: ‘There is a will' for older workers to stay involved,” Ulian says.
In winning the war for talent, 84 percent of employers say they offer financial benefit plans like 401(k) and other equity plans because it helps retain existing talent. Nearly half of employers responding in the survey say providing these benefits help employees be more productive.
In addition to benefit plans, more employers are offering to help employees learn how to prepare for retirement (61 percent), pay for health care (51 percent) and understand investments (41 percent). Employers are also offering to help employees with personal finances.
Nearly 40 percent of employers provide workers access to one-on-one sessions with financial advisers as well as online tools to help with all banking and investment needs, the survey reported.
“Employees don't leave their troubles in the parking lot, and employers are beginning to realize this,” by offering financial education programs, Ulian says.
Still, while offering financial education and advice is a positive step, 59 percent of employers say that less than half of employees take advantage of it, with 54 percent of employers saying employees think it's too complicated or not relevant.
“I think in some respect we are missing the boat on how we communicate,” benefit plans and financial education opportunities, AGL's Miller says.
Jeanne Meister, co-author of The 2020 Workplace, says that by 2020 employers will be faced with communicating to five generations of workers. Employers might be more successful in communicating to older employees through social networks such as Facebook, because people over 55 are the fastest-growing percentage of users, Meister says.
“This is a challenge and an opportunity for employers,” Meister says. “The time is now, among employers, to find engaging ways to get working adults to think about financial benefits.”
Workforce Management Online, July 2011 -- Register Now!

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