Why we should encourage over 55s to choose contract work over retirement
Senior personnel can offer valuable experience and fill skills gaps.
WITH TALK OF full employment and businesses finding it nearly impossible to source experienced talent, thoughts turn to a valuable cohort of potential workers.
Older people are generally financially secure, largely independent and have much to offer in terms of experience.
While there are some practical issues when it comes to employing a senior worker, many employers today are happy to tap into this resource.
At Contracting PLUS, we see many skilled employees in sectors like finance, IT, logistics and project management transition seamlessly into professional contracting.
In fact, individuals with expertise in an industry are being snapped up for project work in major companies, for startup support and for part-time roles where a full-time position isn’t justifiable.
Wanting to remain in the world of work and relishing the challenge of pastures new, more and more people approaching retirement are now looking at contract work as their next career move.
Some senior personnel are forced out of a job because their contracts say they must retire by a given age. Others just realise that staying involved and active is best better for your mind, body and spirit.
Industries are also waking up to the value of an experienced executive, and recruitment agencies actively approach senior personnel on their consultancy availability ahead of retirement.
Government policies
Over 55s have a wealth of knowledge and practical experience that leaves industries when they retire.
Between 2011 and 2016 there was a significant migration of working people under the age of 25.
These people should by now be in middle management, but the slowing of the economy meant their senior colleagues ended up straddling both a mid- and upper-management role.
This has left a more significant gap in the transfer of knowledge between those leaving the workforce and more junior staff.
Although recognised as a problem in many sectors, no official structure is being advocated for or implemented to retain the knowledge leaving with retirees.
There is no government policy to incentivise working longer, despite skills shortages and difficulties in providing for an ageing and growing population in retirement.
Creative government policy might let individuals defer their State pension, continue working and get a tax credit equal to the pension value instead.
With old age pension at €243.30 a week (€12,652 per annum), the worst case for the government would likely see this being cost neutral.
But it’s more likely the government would end up in a positive position.
Assuming PAYE and earned income tax credit remain the same after the next budget, annual earnings would need to be €60,000 or more a year before it costs the State.
An older professional contractor is unlikely to earn that amount of money as they would probably only work part-time.
Whatever the incentives though, facilitating people so they can work longer has to be one of the strategies to help diffuse this pensions time bomb we hear so much about.
Pension provision
The last census showed an increase of almost 20% in the number of over 65s who make up the general population, while a recent OECD report suggests the average Irish pension is just 34% of current earnings.
Encouraging retirees to contract, and actively supporting them in doing so, will allow older people to top up their pension pots, particularly those without any private pension provision.
Two thirds of the private workforce have no private pension to supplement a State pension and could face financial hardship.
The main reasons people don’t have pensions are affordability and apathy, it’s suggested.
And while the government’s plan to auto-enrol workers into a pension scheme may help with the apathy, the percentage opting out might still be high if affordability is an issue.
Incentives that encourage employers to tap into the ‘pensioners’ resource pool are merited, along with positive messaging around the many role models who are well into their 60s and 70s and are active as both captains of industry and part-time crews.
Ireland will have one of the highest State pension ages in the world by 2028, when the State retirement age will be 68. If someone ‘must retire’ at the age of 60 or 65, then there is a wait of between three and eight years before the State pension kicks in.
Even trickier for the people granted mortgages calculated up until the age of 70, retiring at 65 means there are still five years of mortgage payments left.
Contracting
The growth in consulting and contracting towards the end of a person’s career is not all motivated by finances, however.
Apart from the choice and freedom that contracting affords all independent professionals, there are other reasons someone over the age of 55 would opt to contract.
For a business owner, there are tax advantages to selling your business between the ages of 55 and 60, and yet it can be important for the new owner to retain their skills and intrinsic link to the business or brand identity.
Retirees can start to build a business that they might want to get their children involved in at some point. Contracting is a great means to test the market and build contacts and a client base. Having a limited company structure can be a smart way for a contractor to start.
Job satisfaction is also a powerful motivation. For many people, their career has been a major part of their lives and most have progressed to a role they enjoy.
The constraints of a set workplace or lengthy commute no longer necessarily apply. A contracted project or support role doesn’t need to happen on the client’s premises; many contractors work from home at self-appointed hours.
There also isn’t the stress of a full-time job, and working on an ad hoc consultancy basis is an ideal transition to eventually downing tools at a later stage.
It may be a generalisation, but not everyone wants to garden when they retire. Retired people may just prefer to have a hobby in business as opposed to the front garden.
Jimmy Sheehan is the commercial director of Contracting PLUS.
