Managing Early Retirements

When a company decides to downsize its operation, its first task is to examine alternatives to layoffs. As we mentioned earlier, one of the most popular of these methods is early retirement.22

The Features of Early Retirement Policies

Early retirement policies consist of two features: (1) a package of financial incentives that makes it attractive for senior employees to retire earlier than they had planned and (2) an open window that restricts eligibility to a fairly short period of time. After the window is closed, the incentives are no longer available.23

The financial incentives are usually based on a formula that accelerates senior employees’ retirement eligibility and increases their retirement income. It is ...

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