The Covid-19 pandemic will mean a need to reimagine old age, retirement issues and work, says a leading expert.
Experts agree that more people are likely to need to keep working past retirement as people live longer and employers change the way they fund pensions due to the economic crisis following lockdown.
After the 2008 financial crisis, one in ten organisations paused matching pension contributions – and it can be hard to fully recover from such actions.
According to Yvonne Sonsino from HR experts Mercer, seven in 10 executives are worried about the cost of financial overheads – like health and retirement contributions – for employees who stay on.
The impact of Covid-19 on financial resilience will be big. Sonsino argues that companies will need to adopt preventative actions towards financial wellness in the same way that they do for health and well being. That will mean taking a holistic view of the person, including their ability to work longer or start a business on the side of work. The pressure on employers to actively plan for later life and to provide midlife career checks will increase, argues Sonsino, as well as the pressure to invest in innovative approaches.
Flexible working, increased access to digital healthcare and creative thinking about wealth management, including access to financial education and a five-year financial health check from the age of 40, will be key.
Sonsino says, however, that organisations need to go further and reimagine retirement. She asks: “Can we support individuals to think inter-generationally and pool assets (funds or property) for higher return potential, for instance? What income-smoothing products might the self-employed require to manage income volatility? What about permanent life insurance or longer-term mortgages? How can we make phased access to pension assets easier? Governments and companies will have to work together to make outdated financial products and solutions more age-and longevity-appropriate.”
In addition, says Sonsino, work will have to be reimagined, including a deeper blurring of the lines between employment and self-employment and between retirement and semi-retirement.
With regard to the short term impact of Covid-19, she says employers need to think about issues such as whether insurance policies cover older workers and whether they exclude those with chronic conditions as well as whether employers offer carers leave.
While the longer term impacts of Covid-19 are hard to predict, some that could be considered include the longer term health impact of Covid-19 and whether that will require rehabilitation programmes and fears over return to work, particularly for those with underlying health issues; age discrimination in hiring policies for those who have lost their jobs; the mental health effects of isolation; the impact of the economic downturn on pensions; and whether older people can work part time while drawing their pension.