Retirement at 65 could be scrapped in 2010
Businesses face the prospect of being unable to compel staff to retire at 65, after the Government brought forward plans to review the default retirement age.
Under current retirement rules, employers can require staff to retire at 65 – although workers have the right to have requests to continue working considered by their employer. Businesses can also set their employee retirement age above or below 65, if a change can be justified.
The Government was due to review the retirement age in 2011, but the economic climate and concern about pensions have prompted the Department for Work and Pensions to bring it forward to 2010.
The Minister of State for Pensions and the Ageing Society, Angela Eagle, said:
“The Government is responding to the changed economic landscape.
The different circumstances today – for businesses and for individuals coming up to retirement – suggest that an earlier review is appropriate.
Some people prefer to take early retirement, others prefer to keep working. We want to give people flexible retirement options.”
The Chartered Institute of Personnel and Development (CIPD) welcomed the news.
“The Government has no choice but to bring this review forward to help organisations make better use of the talent, skills and knowledge of experienced older employees, but also to help supplement their diminishing pensions.”
said CIPD policy adviser, Dianah Worman.
The Confederation of British Industry’s (CBI’s) director of HR policy, Katja Hall, however, said there was no need to scrap the default retirement age, as most employers were already flexible in their approach. CBI research has shown that 81% of requests to work beyond the age of 65 are accepted.
“Having a default retirement age helps staff begin the process of deciding when it is right to retire, and helps firms plan ahead. The research shows that businesses don’t want to lose good people, whatever their age.
Some people can happily work in their existing job beyond the age of 65 but this is not possible for all occupations, and companies with small numbers of staff have particular problems adapting jobs to the needs of older workers.
No-one has yet suggested a workable alternative to the default retirement age.”
A Government spokesperson said that both employers and employees will be asked about their views during the review.