UK
London, 12 August 2010

• Companies need to review their current benefit structures to manage the increasing costs and changing requirements of an ageing workforce

Following the government’s proposals to scrap the default retirement age, Mercer has highlighted the implications of an ageing workforce for companies’ health and benefits policies.

With the growing incidence of major illnesses with age and increasing sickness absence, the cost of providing employee risk and healthcare benefits will rise. Some benefits may even become uninsurable for older employees.

Mercer recommends that companies review existing benefit structures to ensure that they remain cost-effective and continue to meet employer and employee requirements. One potential solution is to introduce a flexible or voluntary benefits arrangement which can provide a viable way of meeting individual employees’ needs.

Companies will also need to reflect the different requirements of an older workforce in their benefit schemes.

According to Jamie Marshall, Principal in Mercer’s Health & Benefits business: “Changes to demographics in the workforce mean that employers need to address the impact of longer working lives on the design of their benefit arrangements. The frequency of major illnesses typically escalates with age and could significantly increase expenditure on risk and healthcare benefits.

 “There are several steps that employers can take to alleviate these costs. We advise organisations to reassess their current benefit policies to ensure they meet the changing needs of employees cost-effectively, and reflect the removal of the default retirement age.”
 

Notes for editors
The removal of the default retirement age (DRA) will begin in April 2011 with intermediary arrangements covering the period until 1 October 2011 when the DRA will finally become outlawed.

Review of the Default Retirement Age Paper