A closer look at phased retirement and how we came to recommend the sinus career model.
We’ve taken a closer look at phased retirement and answered the most important questions. To us, the key was working out whether phased retirement can be combined with home life. That’s how we came to the idea of a sinus career.
Phased retirement sees older employees reducing their workload, possibly stepping down from management positions and taking home less pay before reaching pension age.
The idea behind phased retirement is that employees don’t have to switch their professional life from 100 to 0 when they reach pension age. It’s not uncommon for employees to feel overwhelmed before retirement. Some develop existential angst, others simply don’t know what to do with all this free time that has suddenly descended upon them. A successive reduction in working hours can help to get people used to their new phase in life.
Phased retirement, however, can also be in the company’s best interest. Employees often remain in their management positions until retirement. This blocks young talent. The company can’t live up to their aim of optimally using existing know-how and the resources on hand.
Statutory contributions to the pension pot increase as employees get older. If older people were to reduce their workload, the employer’s obligations would also reduce. But income savings shouldn’t be the aim behind phased retirement. Any income losses would be balanced out by higher wages for employees at peak career age. Rather, the aim should be to distribute employees in the best possible way and to encourage existing knowledge being used to generate profit.
By law, an employee can only wind down before retirement voluntarily: employers can neither force an employee to make a reduction nor demote them to a lower level. But this is partly necessary to achieve any reduction in the sense of phased retirement. If a contract with suitable conditions is presented, employees may not want to sign it. As well as statutory requirements, we also have to consider the risk of reputation damage. If a company wants to force phased retirement or this image is communicated externally, the company could easily be accused of treating older staff as second class employees.
A reduction in workload can definitely comply with the employee’s wishes. But it is important to establish the reasons behind this. If this desire is based on pressure to succeed and being overwhelmed with work, then winding down is only voluntary to an extent, and not the right solution in our opinion. But if employees want to spend more time looking after their grandkids or gardening, or simply don’t want the responsibility anymore, phased retirement can be a good solution.
Phased retirement doesn’t just support employees in their desire to wind down their workloads: at the same time, more younger employees can move up into management positions. This can definitely have a positive impact on the company dynamic. Younger members of staff can realise ideas, be taken seriously and be promoted with a flush of motivation.
Older employees can withdraw to their specialised area and take on a consulting role. They’re no longer relied upon to drive the company forwards with new ideas. Rather, their expert knowledge is valued and they can coach younger staff members. This can lead to a general increase in wellbeing.
It doesn’t sound bad at all. But how easy is it to combine an employee’s private life with phased retirement? Phased retirement envisions that you work your way up in your career from your first job to your peak at around age 45, then slowly start to wind down.
But what about employees’ private lives? The years leading up to someone’s 45th birthday can be packed full of various events and needs: a yearning to travel and go on adventures, starting a family, becoming an ambitious amateur athlete or buying that dream home.
Let’s take a look at two examples: adventurous Annika and family man Franz.
Annika wants to go on adventures and explore the world. She is highly motivated in her work until she feels the pull of travel. She then returns completely relaxed, so can carry on where she left off full of energy. She’d also like to study so she can bring more knowledge and life experience to the company.
Franz jointed the company after an apprenticeship and was awarded his first management position at 31. Almost at the same time, Franz was blessed with fatherhood and would love to spend more time with his new addition. He can’t go down to 60% due to his leadership position. By the time he’s 45, his children will be in school and he’ll be ready to work for another 20 years.
Here at HR Campus, we believe that phased retirement is no longer the best option for the new generation. The model doesn’t offer enough flexibility for busy, active types or for families to optimally balance work and private life. Phased retirement plots career peaks at age 45. If employees are forced into phased retirement, they are being told that they have reduced in worth.
So why not a flexible sinus career? We don’t want a triangle with a peak in the middle, rather several different ups and downs that let employees balance work and home life. We believe that this approach allows companies to profit from motivated employees that can also be more productive thanks to their increased wellbeing: Happy Employee, Happy Company.
In 20 years, Franz will want to do further training again to be up to date. He will bring in new ideas and be able to lead a team even better with the life experience he has gained. He also has a strong understanding for young employees. After all, he also has children their age.
In 20 years, Annika will have so much professional experience that you can hand over a project to her from the first day of work. You can be sure that she will manage and execute it to your complete satisfaction. Thanks to her travels, she remains flexible and still comes to the office motivated and with new ideas at the age of 50.
Anja Buser consciously decided against a classic career and is convinced that there are many other employees who don't want to go higher, faster and further. As an HR strategies consultant, she advises businesses on the design and implementation of contemporary career paths.
Published: 5. December 2019