More employers are interested in phased retirement programs as more American workers decide to put off a full-fledged retirement and opt to work part time instead. However, legal and regulatory impediments must be worked out before such programs can proliferate.
“Clearly, phased retirement programs can benefit businesses as well as older workers, but to take hold, many rules, regulations, and uncertainties must be addressed,” Pierce Noble, a Mercer retirement consultant, told the Department of Labor’s ERISA Advisory Council September 9. “A number of changes in laws and regulations could result in more widespread implementation and utilization of these programs. Changes would be needed in the structure of Social Security and Medicare and to provisions of the Pension Protection Act, the Age Discrimination in Employment Act, and certain provisions of ERISA.”
Examples of phased retirement would be an employee working a reduced-hours schedule–on a part-time, seasonal, or project basis, or as a temporary fill-in for absent employees, Noble said. This may be as a regular employee, in a consulting arrangement, through a third-party organization, as part of a pool, or as a temporary fill-in for employees who are absent or on leave.
Noble spoke before the ERISA Advisory Council Working Group on Phased Retirement, which is examining the need for an improved system of phased retirement opportunities. The group will draft recommendations for the ERISA Advisory Council to make to the Secretary of Labor.