Government confirms removal of default retirement age

The government has confirmed the default retirement age (DRA) will be phased out between 6 April and 1 October 2011.

The government has today published its written response to its recent consultation on the removal of the DRA and new guidance to help employers adapt.

The removal of the regulation means from 6 April 2011 employers will not be able to issue notifications for compulsory retirement using the DRA procedure.

Between 6 April and 1 October, only people who were notified before 6 April and whose retirement date is before 1 October can be compulsorily retired using the DRA.

After 1 October employers will not be able to use the DRA to compulsorily retire employees.

Although the government is removing the DRA, individual employers will still be able to operate a compulsory retirement age provided they can objectively justify it.

The government will also introduce an exception so that there are not unintended consequences for employers that currently voluntarily offer group risk insured benefits (income protection, life assurance, sickness and accident insurance, including private medical cover), due to concerns that removal of the DRA could lead to increased costs and uncertainty for businesses by in effect removing the cut-off point beyond which benefits are no longer offered.

Edward Davey, employment relations minister, said: “Retirement should be a matter of choice rather than compulsion – people deserve the freedom to work for as long as they want and are able to do so.

“Older workers can play an incredibly important role in the workplace and it is high time we ended this outdated form of age discrimination.

“We are putting in place support to help business adapt to the change, but it is important to remember that about two-thirds of employers already operate without fixed retirement ages – and many of those with retirement ages already offer flexibility for workers to work longer.

Minister of state for pensions, Steve Webb, added: “It is right we put an end to this outdated form of discrimination where employers can force people out of a job simply because of their age. We will work with employers to ensure the transition is fair and well understood.”

The Employers Forum on Age said that employers have nothing to fear from the removal of the DRA. Rachel Krys, campaign director of leading age campaigners, said: “Employers have been preparing for this change and many are realising the benefits it will have for both them and employees.

“A new approach to retirement which enables individuals to work as long as they are making a valuable contribution, and protects employers’ ability to provide insurance and benefits, is a pragmatic response to the increasing calls for change.†

“Growing numbers want to and have to work beyond 65. Outdated policies which prevent this group working increase the burden on the already creaking state pension provision and ignores the fact we are living longer and healthier lives.†

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“Employers without retirement ages experience a greater focus on performance, a reduction in recruitment costs and the retention of talent, whatever the age.”

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