Working past retirement age – what employers need to consider

Many employees today want to work past their retirement age to reap the benefits of a longer working life such as higher income after retirement or reduced tax deductions after 67 (in 2024). In this article, we explain what employers need to consider if their employees want to work longer than the state pension age.

As the population lives longer, the retirement age is getting progressively later. The state pension age is based on when your employee was born:

• those born 1957 currently have a general retirement age of 65,
• 1958 - 1959 should generally retire at 66
• 1960 – 1966 are expected to retire around 67
• 1967 -1980 are expected to retire around 68
• 1981 and later are expected to retire around 69 years old.

However, an increasing segment of the workforce desires to work past this retirement age and reap the rewards associated with a longer working life. Additionally, other options such as early retirement and part-time pension can also have an influence on the employees' retirement planning. With all these options, employers have more to consider than ever.

What to consider when employees want to work past retirement age

For businesses that have signed a collectively agreed pension solution, you need to be fully aware of how the pension is regulated in the collective agreement. Questions to ask are:

• Does it allow for occupational payments to be paid after the designated retirement age?
• What are the minimum requirements for insurances and to what age
• Is there an opportunity for early retirement or a reduction in working hours? This is the case in the largest white collar occupation pension in Sweden, ITP.

Other collectively agreed pensions solutions have similar provisions and it's imperative to be aware of how that is communicated to your employees in your policy.

If your company doesn't have a collective agreement, it's even more important to have a clear policy reflecting your private occupational pension solution as the terms may not include working past retirement age and you may be left without sickened or life insurance when your employee reaches 65.

The importance of documenting – things to consider when drafting your pension policy

Whatever the situation, planning for employee retirement is crucial. It helps ensure a stable working environment and ensure services aren’t disrupted. Having information around your company's working age and options around working after the normal pension age clearly documented and accessible in a personnel handbook or pensions policy reduces administration time and risk while increasing transparency and stability.

There are many important points to consider for your policy whether you have a collective agreement or not, for example

• What is your company's retirement age?
• What insurances will continue to be available after that retirement age should your employee decide to continue?
• Will there be an opportunity to continue receiving premiums for the employee's occupational pension
• Are there any exceptions for employment types such as part time or seasonal work

This of course is just a selection or the points to consider. Here at Azets we can help you navigate the common pitfalls that come with working after retirement age and support your business with our administration, whether you have collective agreements or not.

If you as an employer have questions or would like support around collectively agreed insurances, you are welcome to contact us!