Scrapping of default retirement age welcomed

Posted on: 29 July 2010 by Editor at Large

As has been widely expected, the government has announced the end of forced retirement at 65. The move has been welcomed by senior campaigners and the TUC though not by employers.

Default retirement age scrappedNews that the government plans to scrap the default retirement age in the UK from October 2011 has been welcomed by activists, trade unionists and individual workers.  Under the new proposal, employers would not be allowed to automatically dismiss staff as soon as they reach the age of 65.

At present you can be made to retire at the age of 65 without your employer paying any financial compensation.

Age UK has led the campaign to abolish the Default Retirement Age.  Michelle Mitchell, Age UK Charity Director, said: “Everybody stands to win from scrapping forced retirement. People over 65 will have full employment rights for the first time. The economy will benefit from older workers’ precious skills and experience and their increased buying power. Public finances will receive a boost from more people paying taxes for longer.”

Move welcomed

Phil Howcroft, Chief Executive Officer of the Oddfellows, one of the largest organisations in the country specialising in supporting older people in the build up to retirement and afterwards,  also welcomed the news. He said: “Many people can’t afford to retire at 65; many actually want to carry on working and it’s in the interests of employers and the economy more widely to tap in to this huge resource. British society has taken the view for too long that when workers hit 65 they should be pushed out of their jobs, given a pair of slippers and a Parker Knoll chair and that’s nonsense. We’re allowing prejudices to prevent us from exploiting the skills, experience and enduring energy of our older workers. We’ve got members doing extreme sports in their 60s, becoming authors in their 70s and organising massive events in their 80s. We need to look not just at scrapping the default retirement age, but also how to encourage employers to offer more flexible working hours for older people to allow them to contribute to the work place for as long as possible.”

Trades Union Congress (TUC)  General Secretary Brendan Barber, also welcoming the proposal,  said: ”We need to go further to give people real choice about how and when they retire with new rights for flexible working. Not everyone wants to work longer and may not be fit enough to continue. Today's move should be about choice, not an expectation that people will work longer so don't need decent pensions.'

Employers cautious

The news was less welcome to the employer’s organisation the Confederation of British industry (CBI). John Cridland, CBI Deputy Director-General, said: “The decision to abandon the DRA leaves business with many unresolved problems, and the Government’s timetable to scrap it will give companies little time to prepare. Scrapping the DRA will leave a vacuum, and raise a large number of complex legal and employment questions, which the Government has not yet addressed. This will create uncertainty among employers and staff, who do not know where they stand. There will need to be more than a code of practice to address these practical issues; we will need changes in the law to deal more effectively with difficult employment situations.

“A default retirement age helps staff think about when it is right to retire, and also enables employers to plan more confidently for the future. In certain jobs, especially physically demanding ones, working beyond 65 is not going to be possible for everyone.”

With a rapidly growing population over the retirement age, the government hopes that by keeping people in employment longer, it can bring more money into the treasury through taxation. It could inject billions into the economy. It is hoped that it could be of benefit to those facing retirement on meagre pensions.

Pensions minister Steve Webb said: "By spending longer in the workforce [people] can also have a better pension in retirement."

Not all job sectors will be affected. Individual employers in some sectors will be able to make employees retire at a fixed age, but must provide justifications for doing so.

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