Phased Retirement

Todays work place is challenged with having up to four different generations

working side by side. For most employers, designing a compensation and
benefit structure that address the unique needs of each demographic group, is
a complex task. Added to that is the shift in pension structures over the past
few years. Some non-profit organizations provide their employees with a
pension fund; however most tend to offer only contributions to an RRSP. This
leads to an increasing number of employees not feeling able to retire.

It is important that organizations understand the details of their pension plan,

whether it is a defined benefit or contribution or simply an RRSP program
before considering design changes. For those not hindered by a design change,
one option that is gaining in popularity, especially in this sector, is providing a
phased retirement program for older skilled employees.

For employees:
Components of the phased program are allowing employees who might be
considering retiring to delay their departure date, continue to earn a partial
income that reduces the burden on their pension income, they continue to
receive benefit coverage and are able to acclimate gradually by continuing to
reduce their hours until they are prepared to leave.

For employers:
Employers are able to develop a timely and effective succession plan without
losing critical skills or intellectual capital. Organizations benefit by being able
to tap into the most experienced staff at a reduced salary, while transitioning
to a new team or organizational design.

Hurdles:
Employees need to understand the impact continuing to work may have on
pension or benefit programs; also to be considered is the timing of starting
your phased approach. If an employee starts too soon, they might not have
accumulated enough to compensate for the reduced salary.

Employers need to be sure that the phased retirement program is structured

in a way that will not diminish the work of the organization or the financial
position of the employee.