Forcing out long-serving staff and pension implication

enquirer22

I am over 50. At work and amongst my contemporaries there seems an undisclosed policy of organisations to make life difficult for people in my age group, so that we leave (2 of my contempories at work were forced out in this way) in preference to employing younger staff. I wondered what might be the advantages for a Company and its pension scheme to release long-serving members of staff in preference for younger staff members?

Browntoa

Or is it the " we've done it this way for 30 years and I'm not changing " mentality

You bend with the new rules or way of working and find ways to manage them to your advantage

Job allocated has 3 hour timescale but you do in 2 , close job in 2:45 hours and both happy

Make full use of allowed hours for vehicle cleaning / maintenance etc

Think employers are just getting better at enforcing rules they should have done in the past but failed to do so

mgdavid

On the contrary many employers benefit from the experience and 'savvy-ness' of older staff, who have Been There, Done That. However it only really works if the individuals are prepared to embrace change and keep adding and updating their key skills. You need to 'think young' and keep the mind agile. Treat being better than younger colleagues and outwitting senior management as a game.

PaulCooper

Quite simply it's the economics of the situation, it's cheaper to employ someone younger and when the 'retired' person leaves the company, liabilities are passed over to an autonomous pension scheme. 25% lump sums are paid from the scheme, as are on going pension payments and the company gets an eager younger person at probably half price
Paul

hyubh

enquirer22 wrote: »

I wondered what might be the advantages for a Company and its pension scheme to release long-serving members of staff in preference for younger staff members?

To be blunt, that question is essentially unanswerable without knowledge of what pension schemes are involved, and their terms. That said...

If it's DC all round with a standardised employer contribution rate, then there aren't going to advantages for the pension scheme. Alternatively, if you're implying you enjoy a good DB scheme and your younger colleagues a rubbishy DC one, the putting a stop to further accrual in the former would be the prudent thing... however, the reality may be more Hobson's choice depending on the situation.

E.g., for an employer in the LGPS, making an LGPS member in their late 50s redundant can be lead to a large bill from the pension fund given the rules of the scheme. For longstanding non-LG employers in the scheme it would also actively bring forward exiting completely, which is good on the one hand (no more future accrual) but bad on the other (historic liabilities now need to be paid off in short order). Potentially the same thing can apply to multi-employer DB schemes in the private sector, where the pretty tough exiting terms used only by convention in the LGPS are actually required in law (so called 'section 75 debt').

On the the hand, if the DB scheme for old timers is the employer's own, then frankly they can close it to future accrual at any time yet still be able to fund historic liabilities at their own pace. In this scenario, dragging things out by making people individually redundant would be a rather 'round the houses' way of doing things.

atush

The biggest advantage for a company would be that older workers who have been there longer, tend to be more highly paid. Younger ones are cheaper. So pension contribs as they are a % of salary, would also be higher.

That said, older employees tend to be better as they know the job. They could be hard to replace perhaps if their skill levels are high. But do need to innovate and keep skills up.

brewerdave

Having been thru' downsizing 3 times in the last 10 years of my working life, many Companies look at things in a very short term way - how do we make immediate savings on this year's revenue budget.?
Replace someone with 30 years experience (and with the salary and benefits to go with ) with a much younger,less experienced person,lower salary,less benefits (particularly pension contributions!!)
...then leave the new person to phone the displaced person on many/several occasions to find out a) where the required information is b) how to do it and c) who to talk to!!
Happened to me twice!

ermine

enquirer22 wrote: »

I am over 50. At work and amongst my contemporaries there seems an undisclosed policy of organisations to make life difficult for people in my age group, so that we leave (2 of my contempories at work were forced out in this way) in preference to employing younger staff. I wondered what might be the advantages for a Company and its pension scheme to release long-serving members of staff in preference for younger staff members?

You are looking at this all wrong. This is an opportunity to find out about your options for retiring early, getting your life back and getting as much of a bung from the company as you can.

Go here and see how many years you have left. And then ask yourself how many of those you want to spend in a company where you feel they are making life difficult for you. Each one of those is a year you won't live again.

Then examine the choices you are making in your life and see if you can reframe this from a problem into an opportunity. And take appropriate action

A well-paid 50 year old is likely to be in the peak earning years of their working life. And paying a lot of tax - if you are paying higher rate tax you get an effective 66% bump up on any income you forego to put in a SIPP.

Think opportunity. Not problem.

I left work , for entirely negative reasons largely along the sort of aggravation you describe. I look back after four years after retiring early and now consider it would have been a tragic waste of my lifespan to have carried on working to 60. They did me a favour. Working is deeply overrated.

Might not be right for you, but why not think different and kick the tyres? Sure, you have to change yourself and dial back on the consumerism, but they ain't making any more time for you, and you're running short 24 hours every day.