Automatic retirement at 65 is to end next year. Employers will have to ‘objectively justify’ compulsory retirement, which can no longer be on grounds of age alone.
The government has today announced that the Default Retirement Age (DRA) will be phased out from April 2011. This means that employers will no longer be able to oblige their staff to retire simply because they have reached their 65th birthday. They can still impose a compulsory retirement age but will have to justify this objectively. Examples where this might be the case are air traffic controllers or police officers.
Announcing the start of a three-month consultation period, 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’.
The move has been welcomed by Age UK as ‘a massive win for hundreds of thousand of employees who are at risk of being forced out of their jobs’, but less enthusiastically received by the CBI, whose Deputy Director-General said: ‘For employers, these proposals could make workforce-planning and providing some employment benefits, such as critical illness cover, next to impossible.’
The scrapping of the DRA comes hard on the heels of an announcement that State Pension Age (SPA) is likely to rise from 65 to 66 by 2016. Many people seem to be faced with a longer working life, although workplace pensions may continue to start at 65 or earlier.
The relaxation of rigid rules mirrors a change that is already well under way. More and more people wind down to retirement, working for fewer days or less hours but no longer stopping abruptly. This is fine on a voluntary basis, but until now it has depended on an employer’s willingness to permit such arrangements.
From next year, individuals will have more choice – and more retirement choices to make. They might carry on working full-time and defer their pension, or carry on working on a part-time basis while taking a workplace pension but deferring state pension, for example. Some will choose to work for later, but many will still opt to retire as soon as they can. It depends on circumstances, the nature of their job and the size of their pension.
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