Employers want default retirement age reinstated

Nearly half (47%) of respondents would like to see the default retirement age (DRA) reinstated, according to research by global law firm Eversheds.

The DRA was scrapped in October 2011, after a phase-out that began in April.

The research, which was conducted among 307 employers, found that fewer than 3% of respondents now have a policy of mandatory retirement for employees, compared with 69% of those that took part in a similar study, also conducted by Eversheds, two years ago.

It also found:

  • 56% of respondents said the removal of the DRA has led to an increase in the number of employees staying on beyond age 65 or normal pension age.
  • 34% of respondents said the abolition of the DRA has had a negative or very negative impact on their organisation.
  • 72% of respondents said they would still be operating a mandatory retirement age if the law had not been changed.
  • Other implications of the DRA’s removal include: increased costs of redundancies and/or providing benefits (37%) and more management time being spent on performance management (29%).

Owen Warnock, partner at Eversheds, said: “It is clear that, for most of those who took part in the study, it was the government’s decision to phase out the DRA that provided the impetus for change: 72% of respondents said they would still be operating a mandatory retirement age if the law had not been changed.

“This is consistent with the results of a survey we carried out two years ago, just before the DRA started being phased out.

“Back then a significant majority (69%) of respondents still had a policy of mandatory retirement for some or all of their workforce subject to an employee’s right to ask to stay longer.

“The results do show that there have been some positive consequences. With fewer employees being forced to leave at a fixed age, a third of those who replied said the law changing has resulted in improvements in retaining important skills and knowledge within their organisation.

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“There have also been savings on recruitment and training costs for 17% of respondents, while 22% reported savings in time spent dealing with retirement procedures.

“What’s more, the much-feared increased in age-related retirement claims has not, according to the survey respondents, in fact materialised.”