Default retirement age to be scrapped

The default retirement age (DRA) will be scrapped from October 2011 under proposals published for consultation by the government today.

The new plan will allow for a six-month transition period from existing regulations, which will be phased out from April 2011.

Currently employers can make employees retire at 65, however with people living longer healthier lives the government is taking steps to help people work for longer.

Although the government is proposing to remove the DRA, it will still be possible for individual employers to operate a compulsory retirement age provided they can objectively justify it.

The consultation is open today until 21 October 2010.

Employment relations minister, Edward Davey, said: “With more and more people wanting to extend their working lives we should not stop them just because they have reached a particular age. We want to give individuals greater choice and are moving swiftly to end discrimination of this kind.

“Older workers bring with them a wealth of talent and experience as employees and entrepreneurs. They have a vital contribution to make to our economic recovery and long term prosperity.

“We are committed to ensuring employers are given help and support in adapting to the change in regulations, and this consultation asks what kinds of support are required.”

Pensions minister Steve Webb said: “Many older people want to work after age 65 and have a wealth of skills and experience that are not being used.

“We want to get rid of the default retirement age so that if they want to work they can do so. By spending longer in the workforce they can also have a better pension in retirement.”

Caroline Carter, head of the employment practice, Ashurst, said: “The news this morning that the government is phasing out the DRA of 65 from April 2011 raises many difficult issues for employers. One of the key questions will be whether they will be able to objectively justify their current compulsory retirement age.

“The high profile Court of Appeal decision yesterday concerning senior partner Leslie Seldon, which allowed the law firm to justify its retirement age may assist, however many questions remain unanswered, also in light of European case-law.

“‘Objective justification’ under the Employment Equality (Age) Regulations has to date been notoriously difficult to prove. Another key concern will be succession planning and the additional cost of continuing to provide benefits for older employees.

“Also without ‘retirement’ being able to be used as an uncontroversial way for older employers to leave, employers may face difficult situations, and potentially a plethora of tribunal claims, where they dismiss an underperforming older employee on capability grounds.”

Rachel Krys, campaign director of leading age campaigners, the Employers Forum on Age (EFA), commented: “More and more employers will be encouraged to offer a flexible approach to retirement, which will be good for the workplace, employers and employees.

“Employers have nothing to fear from this change. †This is an outdated policy and the removal of forced retirement is an opportunity to put policies and processes in place which make the most of an age diverse workforce.”

Read more articles on retirement age and pensions