Employers’ views sought on flexible retirement update

The government is seeking employers’ views on its plans to update age discrimination laws relating to employees aged over 65 years who return to work under flexible retirement arrangements.

The consultation document, Flexible Retirement: next steps, proposes to lift an exemption in the Employment Equality (Age) Regulations which makes it unlawful to stop pension accruals or entitlement to future benefits for members working under a flexible retirement arrangement. Another option being considered is to exempt occupational pension schemes from paying death-in-service benefits to members in such arrangements.

David Pollard, a partner at law firm Freshfields Bruckhaus Deringer, said that, as the law stands, employers might be deterred from providing flexible retirement policies because of the extra costs of providing benefits, and confusion about where they stood with regard to age discrimination.

He said that although the government’s proposals for pensions were one way to remedy this, it was narrow in its approach and had failed to consider the provision of other benefits, such as medical cover. “If enacted, the exemption applies only if the employee has reduced working hours or grade,” he said.

The consultation, which closes on 10 March, follows a previous consultation on flexible retirement and pension provision, to which the government responded in December 2008.