Like many other developed countries, New Zealand is on the path to becoming a super-aged society, with forecasts indicating that 25% of the population will be over the age of 65 by 2032.

Unsurprisingly, this is leading to an overall trend of extended careers. However, people are choosing to work later in life for several reasons. They are generally healthier and have a longer life expectancy than previous generations. Additionally, higher levels of education increase their likelihood of staying in the labour force. Changes to employee retirement plans, coupled with the need to save more for retirement, also create incentives for individuals to continue working.

This demographic shift presents a unique set of challenges for HR leaders, particularly in the realm of late-career planning.

Why should HR leaders care?

Recent research from the Financial Services Council in New Zealand highlights a concerning trend: over 70% of respondents to a 2021 survey expressed doubt about their financial preparedness for retirement. This uncertainty prompts a crucial conversation about the future financial well-being of New Zealanders.

Individuals in a more advantaged financial position clearly have greater choices regarding their work and retirement decisions. Conversely, for others, workforce participation decisions are strongly influenced by the need for income. They often lack control over their working lives, face forced job changes, and may exit the workforce due to sickness or redundancy rather than choice.

Research from Te Ara Ahunga Ora Retirement Commission in 2022 revealed that 40% of people aged 65 and over have virtually no additional income besides NZ Super, while another 20% have only slightly more. Even with NZ Super, close to 1 in 3 people do not believe they will have enough for retirement unless they continue working past 65. The research also highlights several other dynamics causing financial concern among older individuals:

• KiwiSaver balances are insufficient to provide long-term security, which is expected given that KiwiSaver has only been available since 2007.

• Rising healthcare costs are of particular concern.

• The cost of living is also a significant burden, with some participants stating that petrol costs prevent them from leaving the house and exacerbate feelings of isolation.

As employees age, their needs, abilities, preferences, and attitudes change, potentially leading to a mismatch between job fit and older workers. Health issues, physical challenges, cognitive decline, familial responsibilities, and shifting priorities all contribute to this gap, emphasising the importance of proactive late-career planning.

What is late career planning?

Late-career planning is a strategic process that individuals undertake as they approach retirement age. It involves thoughtful decisions about work, finances, health, and lifestyle to ensure a seamless transition into retirement or semi-retirement.

Employers can and should play a role in facilitating late-career planning to meet the evolving needs of older workers. Effective late-career planning involves meaningful discussions between management and older workers, utilising tools like job crafting to create a better fit between the individual and their job.

A key advantage for the employer is the ability to collaborate with the employee to understand how the employee would view their future work. Far too often it is the case that employees simply leave an organisation without prior discussion around work flexibility and passing on of key employee knowledge and skills.

A structured approach to late career planning benefits both employee and employer.

Why act now?

The mature-aged workforce could be key to filling significant skills gaps in an organisation, particularly if absenteeism and staff turnover are major concerns.
If absenteeism and staff turnover is a big issue, late-career employees can bring stability to an organisation.

How top organisations are responding

Organisations should conduct a range of discovery sessions with their late-career employees to first understand what is important to them as they move towards the later stages of their careers and what can assist them through this process. This should then be overlaid with relevant organisational data to inform robust late-career program design.

Four fundamental steps should be followed:

1. Listen to and consider the needs, preferences and expectations of late-career employees.

How to action: listening exercises such as surveys, interviews and focus groups.

2. Understand what the gaps are and opportunities.

How to action: draw on relevant in-house data to conduct a gap analysis and understand the opportunities that are not just those desired by employees.

Examples of opportunities:

• Development HR Practices (Growth Goals): Include training programs aimed at helping older workers prepare for the next stage of their lives and careers and to open the dialogue from both employer and employee perspectives.

• Maintenance HR Practices (Maintenance Goals): Conduct early discussions on the structure of employment post-retirement age to ensure job security and to promote clarity for all.

• Utilisation HR Practices (Recovery Goals): Introduce task variety to help workers recover earlier levels of functioning through adapting to new roles.

• Accommodating HR Practices (Regulation of Loss Goals): Offer reduced workloads if preferred, allowing older workers to cope with diminished functioning without displacement.

3. Consider the most appropriate level of engagement for the opportunities.

How to action: decide on format, duration, frequency, and delivery mode.

4. Once implemented, ensure a constant feedback loop to improve and refine.

How to action: interviews and open discussions.

Questions to ask internally

Struggling to have an initial conversation about late-career planning internally? Here are some questions you can start asking your stakeholders:

• What is the average age of your employee population?

• Do you understand the long-term work intentions of your workforce?

• Do you understand workplace options which encourage and support late career work?
  From mentor programs to knowledge exchange, how can you engage and motivate seasoned employees?

• What do senior employees at your organisation desire? What are their expectations?

Remember, late-career planning is not just a personal responsibility but also a crucial element for businesses navigating an aging workforce.

Lockton consults on mature workforce programs, supporting employers in analysing the needs of their mature employees, understanding their long-term working intentions, and developing programs to ensure an engaged workforce. For more information, contact the People Solutions team at Lockton.

The contents of this publication are provided for general information only. Lockton arranges the insurance and is not the insurer. While the content contributors have taken reasonable care in compiling the information presented, we do not warrant that the information is correct. It is not intended to be interpreted as advice on which you should rely and may not necessarily be suitable for you. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication.