Overview: Retirement can be an emotional and harrowing process for aging employees. HR plays a key role in ensuring a smooth transition from employment to retirement. To best accomplish this, HR should develop a keen understanding of the employer's benefit packages, benefits options available to the retiring employee, healthcare eligibility, pension plans and, where applicable, severance packages. HR must also take steps to ensure that any pre-retirement agreements with the outgoing employee comply with the terms of the Employee Retirement Income Security Act (ERISA) which sets standards for implementation of pension plans in private industry. Where HR's evaluation of a retiring employee has identified risk, it should consider a termination agreement to obtain the employee's release of claims against the company (for example, age discrimination) in exchange for valuable consideration.
In addition to providing for a smooth transition for an outgoing employee, HR may also play a role in transferring the outgoing employee's job responsibilities to another employee. HR may wish to explore the need for training and education programs of current employees who are assuming new or additional responsibilities.
Trends: The American workforce is aging. With that development, comes pressure on employers to onboard younger employees while compassionately and legally encouraging older employees to retire. This means that the HR professional has to have a keen understanding of the Age Discrimination in Employment Act (ADEA), the Employee Retirement Income Security Act (ERISA), the Older Workers' Benefits Protection Act (OWBPA) and any heightened requirements based on state law.
Author: Michael Jacobson, JD, Legal Editor
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Employers should be aware that any voluntary retirement program must comply with the Older Workers Benefit Protection Act (OWBPA) and the Age Discrimination in Employment Act (ADEA). This How To will help employers to craft a voluntary retirement/attrition program and to comply with the OWBPA and ADEA in the process of doing so.
HR guidance on identifying risks associated with employee retirement and tools to reduce post-retirement liability.