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331.1
1^651
no. 27



331-1



NSTITUTE OF LABOR AND INDUSTRIAL RELATIONS






J N I V E R S I TT^O F^L L I N O I S



^'



EDITORIAL NOTE The Institute of Labor and Industrial Rela-

tions was established in 1946 to "inquire faith-
fully, honestly, and impartially into labor-
management problems of all types, and secure
the facts which will lay the foundation for
future progress in the whole field of labor
relations."

The Institute seeks to serve all the people of
Illinois by promoting general understanding of
our social and economic problems, as well as
by providing specific services to groups directly
concerned with labor and industrial relations.

The Bulletin series is designed to implement
these aims by periodically presenting informa-
tion and ideas on subjects of interest to persons
active in the field of labor and industrial rela-
tions. While no eflfort is made to treat the topics
exhaustively, an attempt is made to answer
questions raised about the subjects under dis-
cussion. The presentation is nontechnical for
general and popular use.

Additional copies of this Bulletin and others
listed below are available for distribution.

MARTIN WAGNER BARBARA D. DENNIS

Director Editor



ILIR Bulletins

SUPERVISORY TRAINING — WHY, WHAT, HOW $0.25

UNIONS, MANAGEMENT, AND INDUSTRIAL SAFETY
$0.25

WORKERS ON THE MOVE $0.10

JOB EVALUATION $0.25

MOTION AND TIME STUDY $0.25

WORKMEN'S COMPENSATION IN ILLINOIS $0.50

ASSIGNMENT, GARNISHMENT, AND CONSUMER CREDIT
IN ILLINOIS $0.50

PREPARING WORKERS FOR RETIREMENT $1.00

ILIR BULLETIN NO. 27

UNIVERSITY OF ILLINOIS BULLETIN

N'olume 59, Number 53; January, 1962. Published nine times
each month by the University of Illinois. Entered as second-class
matter December 11, 1912, at the post office at Urbana, Illinois,
under the Act of August 24, 1912. Office of Publication, 49
Administration Building (West), Urbana, Illinois.



The person charging this material is re-
sponsible for its return to the library from
which it was withdrawn on or before the
Latest Date stamped below.

Theft, mutilation, and underlining of books
are reasons for disciplinary action and may
result in dismissal from the University.

UNIVERSITY OF ILLINOIS LIBRARY AT URBANA-CHAMPAIGN



K



f-EB28l976

MAR 1 9 1976
MAR 2 3 197
APR 1 6 1976
MAY 61!J76



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DPI
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L161 — O-1096



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Contents



INTRODUCTION

Is Retirement Preparation Necessary? 7
Why the Concern with the Problem? 12

Changes in Population and Labor Force Status 12

Problems of Retirement 14

TYPES OF COMPANY PROGRAMS

\'ariation.s in Scope 21

Individual Counseling Programs 22

Group Discussion Programs 22

Written Materials 23
Variations in Design 27
Variations in Content 31

WHAT ARE THE ESSENTIAL REQUIREMENTS?

Acceptability 35
Adequacy 37
Time 38
Planning 40
Attitude 40
Content 41
Method 42
Summary 44

WHAT ARE THE BENEFITS TO THE COMPANY?

Administrative \'alucs 45

Employee Relations Values 48

Public Relations Values 49

Efficiency Values 49

Dangers in Retirement-Preparation Programs 50

Summary 5 1

EVALUATION OF RETIREMENT-PREPARATION PROGRAMS

WHAT OTHERS ARE DOING

Union Programs 55
Community Programs 59

FUTURE DEVELOPMENTS IN RETIREMENT-PREPARATION PROGRAMS

Program Proposals 60
A Modest Approach 62
Whose Responsibility? 65

APPENDIX

SELECTED BIBLIOGRAPHY



UNIVERSITY OF

ILLINOIS LIBRARY

AT URBANA-CHAMPAIQN



Introduction

Employers have long been concerned about relations with their em-
ployees on the job. Most companies of any size have employee relations,
personnel, or labor relations departments responsible for maintaining
satisfactory relations with the employees and their representatives. Ordi-
narily this responsibility is limited to relations with employees at the
workplace.

In recent years, however, a number of companies have extended their
concern to workers who ha\e been or will be permanently separated from
their jobs by retirement. Unions and other groups have exhibited a
similar interest. One of the developments growing out of this interest has
been retirement preparation programs.

This Bulletin is designed to focus on some of the issues raised by this
relatively new type of employee-relations program, to discuss the experi-
ences of employers and other groups with these programs, and to stimu-
late further consideration of the proper role of \arious groups in pre-
retirement planning.

IS RETIREMENT PREPARATION NECESSARY?

Views vary on the need for and the importance of retirement-
preparation programs.

Some companies are convinced that preparing employees jar retirement
is an important and significant employer junction.

The general personnel super\isor of a large utility employing moi'e
than 40,000 workers states:

Retirement planning, in our opinion, is exceedingly important and we are
vitally interested in pro\iding the best possible program.'



The director of counseling and employee activities of a large metro-
politan department store comments:

We believe that Preparation for Retirement is a very vital part of our person-
nel program. Not only does this program condition older workers to face the
problems of later life, but attention to the needs of these people has had a
very beneficial effect on our entire personnel.

This opinion is shared by the director of the personnel relations depart-
ment of an engineering and business consulting firm:

We feel that this over-all subject is most important in the discharge of cor-
porate responsibility to our employees and we are continually seeking new
thoughts from surveys and suggestions by our employees.

Other C07npanies, while recognizing the need for helping some em-
ployees adjust to the shift from work to retirement, have not yet arrived
at a well defined role for the company or do not see retirement prepara-
tion as a major activity for the company.

This more neutral view is expressed by the president of another large
public utility with a work force of nearly 40,000 employees:

Our action has been limited deliberately because honest differences of opinion
exist generally about the value, need for, and appropriateness of retirement
adjustment programs. . . . We are reluctant to expand our preretirement
planning activities until it becomes more apparent that full-scale programs
really are needed, and that they can be effective in fulfilling objectives or
motives which currently seem in need of more definitive clarification.

A large manufacturer (34,000 employees) also has mixed feelings
about the role of the company in preparing its employees for retire-
ment. According to a representative of its department of personnel
administration :

While we generally agreed with the arguments for developing a retirement
preparation program. . . , we were also aware of the reasons for not develop-
ing a program. On the negative side, the subject was not generally felt to be
an urgent problem and to be done properly it would require definite expendi-
tures of time and effort on the part of the plant personnel departments.

Something less than complete enthusiasm about the need for and value
of a retirement-preparation program is contained in the comment of the
personnel director of a large eastern utility (25,000 employees) :

I think it is a nice thing to do but not really a major project.

Other coTupayiies have considered or experimented with programs but
are not convinced that they are warranted.

Esso Standard Oil Company, which operated one of the most publi-
cized programs, dropped it after a few years. A member of the company's
employee relations department reports:

We had a Preparation for Retirement program in six of our operating units



between 1950 and 1954. Some 700 employees who were within 5 years of
retirement voluntarily participated on company time. While they reacted
favorably, the participants generally agreed that the program was not filling
an urgent need. Consequently the program was terminated, and we have no
current plans — or requests — to resume it.

A large manufacturer of farm implements (95.000 employees) has
given some attention to preparation programs but has not adopted one.
The vice president notes:

For the past couple of years I have had some of my stafT personnel people
follow the available literature in this field, and they have attended some con-
ferences where this question of preparing employees for retirement was the
principal subject of discussion. ... At the present time, [the] company does
not have a program in this area, nor do I expect that we will have one in the
near future.

Officers of some companies oppose preparation programs in principle,
aside from questions of their value or the extent to which they might be
warranted. F. B. McConnell, while president of Sears. Roebuck and
Company, stated that retirement planning is none of the company's
business. -

The range of opinion on the need for and value of retirement-
preparation programs is just as broad among leaders of other groups.

Trade unions, for example, have given relatively little attention to the
problem of education for retirement. In a study financed by the National
Institute of Labor Education and conducted by the Department of
Sociology, Purdue Uni\-ersity, the researchers found that only two inter-
national and two local unions in their national sample had a specific
program under way.^ In interviews with thirty-five international presi-
dents, education directors, research directors, district leaders, and other
union representatives, four main points of \iew were expressed. One
large group was completely unaware of the general concepts of prepara-
tion for retirement and presumably had given little or no thought to it.
A second large group was interested but did not consider the idea feasible
for a \'ariety of reasons.

A minority was definitely opposed to the idea of a retirement-
preparation program and considered the notion pure paternalism. A
union economist, speaking at a 1951 conference on the older worker,
expressed this viewpoint when he said that the actual cause of retirement
shock is the loss of employment suffered by the employee who wants to
and is able to continue working. He claimed that counseling programs
and the like make retirement a formal procedure similar to the practice of
retiring old machinery and are only the sugar-coating on a bitter retire-
ment pill that industry has manufactured for its employees. Unions gen-



erally oppose compulsory retirement and, in his opinion, preretirement
plans are intended to counter the union drive to abolish it/

The fourth group, also a small one, consisted of those who were
actively interested in preretirement planning and wanted to get a pro-
gram started but believed either that not enough was known about
retirement to warrant a program or that they did not know how to
implement a plan. A few unions are taking the lead in looking for ways
to help their members prepare for retirement, presumably because they
are convinced of the need for and the value of retirement preparation.
Among them are the United Automobile Workers and the United Steel-
workers, on both the international and local levels, and a number of
other unions, particularly at the local level. In some areas union repre-
sentatives participate in community or social service agency programs in
the preretirement field.

An encouraging sign for those w^ho believe unions should take a more
active role in preparing their members for retirement was the two-day
conference on Retirement and Leisure in Industrial Society, sponsored by
the Industrial Union Department, AFL-CIO. The conference was called
to direct attention to the responsibility of unions in education for retire-
ment and was aimed particularly at those people who plan, administer,
and teach in this field. That there is uncertainty regarding the utility
of retirement-preparation programs among union leaders, however, was
reflected in the opening remarks of Albert Whitehouse, director of the
lUD. While recognizing the usefulness of such programs, he pointed out
that education for retirement "is not and cannot be the main concern of
labor. . . . We can help, but we of labor can't be trapped into believing
that something called pre-retirement education is the answer to the
problem." He went on to say, "This, then, must point the main goals for
labor. Through bargaining and legislation, our job must be the improve-
ment of the physical, financial, and health care of the senior citizen."^

Finally, some persons have questioned the effectiveness or appropriate-
ness of retirement-preparation programs conducted by individual
companies or unions and have suggested a broader approach. A repre-
sentative of a midwestern firm comments:

Frankly, we haven't expanded our program because of a growing doubt as
to the effectiveness of retirement preparation administered to employees over
age 60. During the past year we have been thinking more in regard to com-
munity wide education and preparation, using public schools, both for youth
education and adult education, our public library and all of the community
agencies and resources to carry the message to all ages that there is life after
50 which requires preparation in order to be fully enjoyed and appreciated.
Actually, now that we are entering the fifth year of operation under our pen-
sion plan with retirement compulsory at age 68, we find that almost all our



10



employees have worked out for themselves plans for retirement, and those
who have more recently retired have been able to make very satisfactory
adjustments. It appears that when the time for individual preparation is not
too short, our employees, assisted by an ever increasing literature in periodical
and book form, are working out this change in their lives just as they worked
out earlier changes such as marriage, births, deaths, etc.*

Charles E. Odell, director of Older and Retired Workers Department,
UAW, sees a great need for retirement-preparation programs and a great
opportunity for valuable service to the individual and the community. He
believes that the ultimate responsibility for these programs should rest
neither with management nor with unions :

Whose responsibility is it to promote and conduct these programs? My feeling
is that this is basically a community responsibility which ought to be an
integral and continuous offering of the community's adult education program.
I believe that neither management nor labor should go on indefinitely pro-
\iding these services to comparative handfuls of older people when the prob-
lem and the need calls for greatly expanded educational opportunities in all
lines for middle-aged and older citizens.'

While this view does not preclude the issue of retirement preparation
from collective bargaining, it emphasizes the \alues obtained from wider
sponsorship. Among the values noted by Odell are ( 1 ) availability of the
program to the general public rather than only to those who are working
for companies or who are members of unions which sponsor programs,
and (2) greater opportunity for a professionally led program free from
the special pressures and interests of companies or unions.

It is apparent that there is no agreement among individuals or groups
who ha\e considered or had experience with retirement-preparation
programs. And among those who are generally favorable to the idea,
there is little agreement on the proper extent and content of the programs
or on who should accept the responsibility for them.

Yet each year more companies, unions, and other groups introduce
retirement-preparation programs for their employees or members. A
1950 survey of 355 companies from various size and industrial groupings
indicated that 13 per cent had formal or informal preparation-
for-retirement programs.^ Five years later, the National Industrial Confer-
ence Board, in a study of preretirement planning, found that 65 per cent
of 327 companies surveyed had preretirement programs of some sort.^

While these percentages undoubtedly reflect a rapid increase in the
number of preretirement programs in industry, the figures are not very
meaningful. Some companies, for example, report activities concerned
with the administration of a pension plan as retirement preparation. A
recent survey of large companies (in general, 2,000 or more employees)
tried to overcome this problem by defining preretirement programs to



11



exclude practices primarily limited to pension administration. When this
definition was used, 39 per cent of the 415 companies responding to the
mail questionnaire reported that they had preretirement planning pro-
grams.^'' The incidence among small companies would certainly be much
lower. Although the total number of programs seems to be increasing,
they are still found in only a minority of companies. Yet they do affect
substantial numbers of workers. Employment in the 415 firms surveyed,
for example, approximated five million. ^^

WHY THE CONCERN WITH THE PROBLEM?

Sheer numbers of older persons in the population and in retirement
has been an important factor in the increased concern with programs to
aid workers to prepare for retirement. In addition, some people do seem
to find the adjustment to retirement difficult, although the evidence on
this factor is conflicting.

Changes in Population and Labor Force Status

The increase in the number and percentage of persons 65 and over in
the population has been one of the dramatic population changes of this
century. Changes that have occurred and those expected in the future
are shown in the following table:



Year
1900
1950
1960


Number

(in millions)

3.0

12.3

16.6


Per Cent of Total

Population

4

8

9


1970
1980


Projection^

I II

19.8 20.6

24.3 26.4


Projection'^

I II

9.7 9.4

10.8 10.2



"Projection I is based on low fertility and high mortality assumptions; Projection
II is based on high fertility and low mortality assumptions.

Source: U.S. Senate, Committee on Labor and Public Welfare, The Aged and
Aging in the United States: A National Problem, Senate Rep. No. 1121 (Wash-
ington: Government Printing Office, 1960), pp. 12 and 19. Data for 1960 from
U.S. Senate, Special Committee on Aging, New Population Facts on Older Ameri-
cans, 1960, Staff Rep. to the Committee (Washington: Government Printing
Office, 1961), p. 2.

At the same time that the total nimiber of older people has been
increasing, the pi'oportion with jobs has declined. The percentage of
males 65 and over in the labor force in 1958 was only half the proportion
in 1890, and the proportion of aged females has increased only slightly.



12



As the following table shows, the decline in labor force participation by
the aged has been continuous, except for the World War II period.

Percentage of Those Aged 65 and Over in the Labor Force''



Year


Total


Male


Female


1890


39.9%


70.0%


8.5%


1900


37.4


64.9


9.3


1920


32.8


57.1


8.2


1930


31.4


55.5


8.2


1940


22.4


43.3


6.7


1945


28.9


50.0


9.4


1950


26.3


45.0


9.5


1958


21.3


34.7


10.0



" U.S. Senate, Committee on Labor and Public Welfare, The Aged and Aging in
the United States: A National Problem, Senate Rep. No. 1121 (Washington:
Government Printing Office, 1960), p. 29.

Part of this decline in labor force participation among the aged is due
to the growing number and proportion of the very old, those presumably
less employable.^^ As the following table indicates, the increase in the
number of people 70 and over in the population has been much more
rapid than the increase in the number of people 65 and over.

Percentage Increase in Population, 1930-1959'^
Men Women

65 and over 109.4% 154.3%

65-69 90.3 125.2

70-74 98.5 141.5

75 and over 151.0 206.1

" U.S. Senate, Committee on Labor and Public Welfare, The Aged and Aging in
the United States: A National Problem, Senate Rep. No. 1121 (Washington:
Government Printing Office, 1960), p. 12.

The decUne in importance of agriculture and the shift to an urban
industrial society together with the parallel shift from self-employment to
the status of employee for most of the labor force are other important
reasons for the declining proportions of the aged with jobs. Industrial
employment provides much less opportunity for individuals to control the
date of retirement, hours of work, energy devoted to work, and other
decisions affecting their status in the work force. In addition, rapid
changes in technology tend to make occupations of many older workers
obsolete, and these men and women find it difficult to fill new jobs.

The broad coverage of retirement benefits under the Social Security
Act and the rapid growth of industrial pensions since \Vorld War II have
also made it possible for more people to retire. However, the growth of
private pension programs in industry has also resulted in an increase in



13



the number of older persons who are required to retire. Compulsory
retirement is much more prevalent among firnis with pension plans than
among those without.

Population and labor force changes and expansion of both public and
private income maintenance programs have resulted in large and in-
creasing numbers of older people in retirement. Of the more than 15
million people aged 65 and over in this country in 1959, about 12 million
were not gainfully employed. They were either retired themselves or the
spouse of a retired person.

Finally, retirement now lasts for a longer period of time. Tables of
life expectancy worked out by Seymour Wolfbein of the Bureau of Labor
Statistics indicate that a male aged 60 in 1900 could expect 2.8 years of
retirement. In 1955, a 60-year-old male could expect more than twice as
many years in retirement (6.7 years), and this number will be 8.2 years
in 1975." Looked at another way, a man who retires at age 65, a com-
mon retirement age, can expect to live about twelve years in retirement
— a period of time equal to more than one-foiuth of this working life.

Problems of Retirement

More older people, fewer job opportunities for them, and a longer
retirement period for most — these are not in themselves causes for con-
cern. Combined, however, with the special problems generally associated
with old age and retirement, they pose serious social issues which have
stimulated interest in preparation-for-retirement programs.

These programs are based on two assumptions:

1. Retirement, which involves a sudden change from the status of employee
to retiree, imposes on the individual a set of circumstances and problems
with which he will not be able to cope satisfactorily.

2. Programs designed to acquaint workers with and help them prepare for
this changed status will increase significantly the chances that retired work-
ers will "adjust" satisfactorily to retirement.

At least two important cjuestions are raised by these assumptions. What
are the special problems that retirement brings and how well are retirees
able to handle them? Do retirement-preparation programs ofTer a
promising way of aiding workers to make the jump from work to retire-
ment when and if this is a difBcult process? Answers to these questions are
needed to determine the validity of the assumptions. Our immediate
concern is the first cjuestion : What are the problems?

Experience of Retired People. Clues to some of the problems have
been obtained by simply asking retirees to describe their experiences.
Gertrude Samuels reported in the New York Times Magazine on some of
her talks with people who had gone to St. Petersbuig, Florida, in search
of a satisfactory retirement life."



14



The Alexander Andersons, both 74, moved from Zelienople, Pennsyl-
vania, a town of 5.000 people, to St. Petersburg where they rented a
furnished two-room flat. Mr. Anderson, a retired carpenter, is almost
totally deaf and suffers from dizzy spells. Mrs. Anderson has arthritis.
They li\ e in St. Petersburg six to eight months a year for the climate.
They must live on $212 a month. They carry some hospital insurance,
"but it doesn't cover but a third of our needs, and if anything happened
to us, I don't know what we'd do." In spite of their problems they like
this life in their old age and their new friends.

Others are not so satisfied.

The Browns, two brothers and a sister in their sixties, came from
Philadelphia where one brother was a cabinet-maker and the other a
school board attendance officer. They live next door to another aged


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Online LibraryWalter Henry FrankePreparing workers for retirement (Volume BEBR Faculty Working Paper no. 27) → online text (page 1 of 8)