Default retirement age to be phased out

Posted on January 15th, 2011 | Categories - Retirement

UK employees will no longer be forced to retire when they reach the age of 65.

Ministers have confirmed that Britons will no longer have to retire at 65 under new laws.

The Default Retirement Age (DRA) will be phased out this year despite objections from employers who had called for the plans to be made clearer.

The change means that bosses will no longer be able to dismiss a member of staff who has reached the age of 65. However, employers will still be within their rights to force people to retire if they are unable to fulfil the duties required of their job.

Employment Relations Minister Edward Davey said: “I think this [change] is really beneficial and should not be the problem some people suggest”.

He continued: “As of now, you are still able under the Employment Rights Act 1996 to fairly dismiss someone if you go though the proper processes – and one of the reasons you can dismiss someone fairly includes capability”.

Under the new legislation employers will not be able to issue notifications for compulsory retirement from 6 April. Only the workers who are issued with a notification before this date and are due to retire before 1 October will be compulsorily retired.

After 1 October bosses will no longer be able to use the DRA as a method of forced retirement.

The government is scrapping the DRA to address the pension shortfall – as life expectancy increases there are more people living past the age of 65 requiring a state pension. It is hoped that allowing people to work for longer will mean that the government saves the money that would otherwise be paid out to the retired.

Business lobbying organisation, the CBI, said that the result of a growing ageing population is that people will inevitably feel the need to work beyond the current retirement age.

Deputy director general of the organisations John Cridland said: “However, in certain jobs, especially physically demanding ones, working beyond 65 is not going to be possible for everyone”.