Thinking About an Aging Workforce - Potential Impact on Workers Compensation

Posted Date: May 2005

The dramatic collapse in the stock market in 2001 substantially reduced the values of most investors’ portfolios. Among those least able to recover are older workers who had looked to these portfolios to help fund their retirement. It now appears that many people will continue to work well beyond their originally planned retirement age.

This is reflected in the recent increase in labor force participation rates of workers over the age of 55. According to three surveys conducted by Gallup for UBS Financial Services, a greater number of people are planning to put off retirement until after age 62. In the 1998 survey, only 36% of respondents planned to wait to retire until after age 62. In the 2002 survey, the number of those saying they would wait increased to 47%, and in the 2004 survey, the number had grown again to 57% of respondents.

If workers put off their retirement and continue to work into their later years as the above suggests, what effect might that have on workplace injuries?

Research by NCCI and WCRI (Workers Compensation Research Institute), among others, indicates that older workers typically have lower rates of workplace injuries but that their injuries result in higher average costs. However, there is little research that examines, in depth, the nature of claims costs for older workers, especially those in their late 50s and early 60s who have postponed retirement because of financial pressures to continue to work and to retain medical insurance.

This is likely to become more pronounced in the future. For example, starting in 2003, the age at which people become eligible for full retirement started to ratchet up, and if there are no changes to the current statutes, it will reach 67 in 2026.

In this research, NCCI examines the severity of indemnity and medical payments by age group for the top injuries in terms of both frequency and total loss costs. This will help stakeholders in the workers compensation system to better understand increased loss costs and to plan for a potentially significant increase in the number of older workers in the coming decades.