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tarasen57 tarasen57
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Posts: 395
A month ago
Why do some employers encourage early retirement? What are some potential problems associated with early retirement programs? How can firms avoid such problems?
Textbook 

Fundamentals of Human Resource Management


Edition: 5th
Author:
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yesimshayyesimshay
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Posts: 305
A month ago
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To trim their workforces or for other reasons, some employers are encouraging employees to retire early. Many of these plans take the form of early retirement window arrangements for specific employees (often age 50). The "window" means that for a limited time, the employees can retire early. The financial incentive is generally a combination of improved pension benefits plus a cash payment. Early retirement programs can backfire. Some are too successful. When Verizon Communications offered enhanced pension benefits to encourage what it hoped would be 12,000 employees to retire, more than 21,000 took the plan. Verizon had to replace 16,000 managers. Discrimination is the other potential problem. Unless structured properly, older employees can challenge early retirement programs as de facto ways for forcing them to retire against their will. Although it is generally legal to use incentives to encourage individuals to choose early retirement, the employee's decision must be voluntary. The Older Workers' Benefit Protection Act (OWBPA) imposes limitations. The employee's waiver must be knowing and voluntary, and it must give the employee ample time to think over the agreement and to seek legal advice, among other things.
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