Government Requests Views on Plans to Phase Out Retirement Age of 65

A consultation has been launched on the Coalition Government’s plans to phase out the default retirement age (DRA) by October 2011. Under the proposals laid out by BIS and the DWP, people over 65 would no longer be made to retire by their employers. At the moment, employers can make their staff retire at the age of 65, regardless of their circumstances. Government statistics suggest that 800,000 people are currently working beyond the age of 65, with demographic trends indicating that people are living longer, healthier lives. The Government plans are part of measures to deal with the higher costs of state pensions, health and long-term care, and the large debt hangover from the global financial crisis. Removing the DRA would give employees the opportunity to work for longer if they want to, but the plans would also help employers by removing the administrative burden of statutory retirement procedures. The government is also intending to raise the state pension age to 66 faster than currently scheduled and to re-establish the link between earnings and the basic state pension. A department spokesperson said:
“With the DRA removed there is no reason to keep employees’ right to request working beyond retirement or for employers to give them a minimum of six months notice of retirement.
Although the government is proposing to remove the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it. Examples could include air traffic controllers and police officers.” However, some employers’ groups are concerned that the planned timetable gives employers little time to alter their policies and practices before the change in legislation. The consultation is open until 21 October 2010 and is asking for views on whether the government could provide additional support for individuals and employers in managing without the DRA or statutory retirement procedure. It is also seeking views on whether the removal of the DRA could have unintended consequences for insured benefits and employee share plans. A link to the consultation can be found here