You are definitely on the right track. The aging of the labor force is driving employers, recruiters and staffing companies to think of creative ways to engage these workers. According to the U.S. Census Bureau, 20.3 percent of the general population will be 65 or older by 2035. But just be aware that there are risks associated with hiring mature workers, especially retirees.
Most companies sponsor retirement arrangements that include a defined contribution plan or a defined benefit plan. As a result, many retirees draw some sort of pension or annuity. Employers that rehire their retirees as consultants need to be aware of the laws that apply to employee retirement plans and classification of workers as employees: the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 (ERISA). Make sure your legal department is actively involved from day one if you are planning on setting this up.
There are companies out there with a temporary labor pool consisting of retirees and former employees. For those corporations that have an internal applicant tracking system and database, setting up a retiree program can be relatively easy. But there are caveats to consider. For instance, in some cases, retirees need to wait six months to be eligible to return in a temporary role. In addition, those who receive a pension can only work 1,000 hours per year -- roughly half time. Some retirees come back as "per diem" employees on the company's payroll.
Using a third-party service or staffing firm is another way to proceed. There are staffing agencies that have a network of retirees. Some client companies let their retirees know about the staffing agency's database. It's entirely up to the workers whether they want to sign up. For its part, the staffing agency makes sure that when its clients reengage their own retirees or those from another company, ERISA rules are complied with. In addition, the agency should also ensure that co-employment issues are avoided by taking care of timesheets, payroll and all other administrative details surrounding a contingent worker.
Many companies that manage a retiree program in-house offer no health insurance, paid vacation time or any of the other benefits that their traditional employees enjoy. But retirees usually are not looking for benefits; their aim is to supplement their income, stay connected and keep busy. In many cases, retirees have a lot invested in the success of the company and want to continue to be a part of it.
Whatever you do, though, do not place retirees back in the same job they retired from, as it raises a red flag with the IRS, warn experts. There's no doubt that retirees come with many advantages, including an institutional knowledge and valuable experience. Just make sure you follow the rules, get internal buy-in, and have a clear pricing strategy when using mature workers. Their expectations are often quite different from those of a regular employee. So long as you have the right structures in place when using them, it should be win- win situation for the retiree, the contingent workforce program manager and the company.