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January 13, 2011

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Workers given choice over when to retire

Employees will now be able to choose when to stop working after the Government announced today (13 January) that it is going ahead with plans to scrap the Default Retirement Age (DRA).
The Department for Business, Innovation and Skills (BIS) claimed that as well as benefiting individuals who wish to work past the age of 65 the freedom to work for longer will boost the UK’s economy.

Employment relations minister, Edward Davey, 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 Older workers can play an incredibly important role in the workplace and it is high time we ended this outdated form of age discrimination.”

His comments were echoed by Pensions minister, Steve Webb, who said: “It’s right that we put an end to this outdated form of discrimination where employers can force people out of a job simply because of their age.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 that the transition is fair and well understood.”

The decision followed a three-month consultation last year (click here for our original story) and means that from 6 April this year, employers will not be able to issue any notification for compulsory retirement and after 1 October, they will not be able to use the DRA to force employees to retire.

Although the Government has pledged to help employers adapt to the change – by, among other things, publishing new guidance on how to manage without a fixed retirement age and introducing an ‘exception’ so that there are not unintended consequences for employers that currently voluntarily offer group risk-insured benefits – many are unhappy with the change.

John Cridland, director-general designate of the Confederation of British Industry (CBI), said it leaves business with a number of difficult practical issues. He elaborated: “The impact on employers, especially smaller ones, will be considerable. There is not enough clarity for employers on how to deal with difficult questions on performance. Less than three months is not enough time for businesses to put in place new procedures. The outcome will be more unpleasant and costly legal action.

“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.”

The TUC, however, welcomed the decision, saying it will “stop employers from dismissing people on an arbitrary basis just because they have reached 65. Employees should be judged on their ability to do the job, not their age.”
The Employers’ Forum on Age agreed, pointing out that now, more than ever, “UK employers need to retain their most talented people and manage those employees who are not performing. Business performance will improve when employees are used to their full potential, managed throughout their careers and not cast aside as they enter their 60s, or encouraged to coast towards retirement.”

Meanwhile, a paper delivered at the recent Occupational Psychology conference held in Stratford-upon-Avon outlined the health benefits enjoyed by older workers. Speaking at the conference on 13 January, the paper’s author, Dr Frances Reynolds, explained how she had investigated the impact that working until a later age could have on employees’ health and safety.

She said: “These older workers were a highly engaged, experienced group, who perceived themselves as unencumbered by the frailties traditionally associated with ageing. Most described deriving physical and cognitive well-being from work; perceived few safety concerns; and believed that, by continuing working, they were maintaining their psychological and physical health.”

The Government’s response to the consultation can be found here while guidance produced by Acas is available here.

Find out more about the British Psychological Society’s Division of Occupational Psychology conference here.

See also the feature in our current (January 2011) issue on managing an age-diverse workforce – Age concern.

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13 years ago

personally i would like to think that the Government would be looking not only to encourage people to work longer but also to give those of us who will have already worke for 49 years when we reach 65 the opportunity to finish at a much younger age?????