Department for Business, Innovation and Skills
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More choice on when to stop working - default retirement age retired
The Default Retirement Age (DRA) will be consigned to the history books by October 2011 under proposals published for consultation by the Government today.
The new plans allow for a six month transition from the existing regulations, following the announcement in the Budget that the DRA would be phased out from April 2011.
Currently employers can make staff retire at 65 regardless of their circumstances but this is set to change as people are living longer, healthier lives.
This measure is one of the steps Government is taking to help and encourage people to work for longer against the backdrop of demographic change. Others include reviewing when the state pension age should increase to 66 and re-establishing the link between earnings and the basic state pension.
The consultation also proposes to help employers by removing the administrative burden of statutory retirement procedures. With the DRA removed there is no reason to keep employees ‘right to request’ working beyond retirement or for employers to give them a minimum of six months notice of retirement.
Employment Relations Minister Edward Davey said:
“With more and more people wanting to extend their working lives we should not stop them just because they have reached a particular age. We want to give individuals greater choice and are moving swiftly to end discrimination of this kind.
“Older workers bring with them a wealth of talent and experience as employees and entrepreneurs. They have a vital contribution to make to our economic recovery and long term prosperity.
“We are committed to ensuring employers are given help and support in adapting to the change in regulations, and this consultation asks what kinds of support are required.”
Pensions Minister Steve Webb said:
“Many older people want to work after age 65 and have a wealth of skills and experience that are not being used. We want to get rid of the Default Retirement Age so that if they want to work they can do so. By spending longer in the workforce they can also have a better pension in retirement.”
Although the Government is proposing to remove the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it. Examples could include air traffic controllers and police officers.
The consultation asks whether the Government could provide additional support for individuals and employers in managing without the DRA or statutory retirement procedure. This includes the possibility of future guidance or a more formal code of practice on handling retirement discussions.
Views are also being sought on whether removal of the DRA could have unintended consequences for insured benefits and employee share plans.
The consultation is open from today until 21 October 2010.
Notes for editors
1) A copy of the consultation can be found here: www.bis.gov.uk/retirement-age
2) We propose that from 6 April 2011, employers will not be able to issue any 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; if they wish to use retirement ages they will have to be able to demonstrate these are objectively justified.
3) The Default Retirement Age of 65 was introduced in the Employment Equality (Age) Regulations 2006. It allows employers to set retirement ages of 65 or higher.
4) The Department for Business, Innovation and Skills (BIS) and the Department for Work and Pensions (DWP) issued a joint call for evidence to inform policy on the DRA, with submissions requested by 1 February 2010. In addition, a number of key pieces of research were commissioned. A summary of the evidence and the independent research reports have been published alongside this consultation document. They can be found here: http://www.bis.gov.uk/policies/employment-matters/research
5) DWP published a call for evidence about the right point at
which the state pension age should rise to 66 for both men and
women on 24 June 2010. It can be found here: www.dwp.gov.uk/policy/pensions-reform/latest-news
6) BIS' online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See http://www.bis.gov.uk/newsroom for more information.
BIS Press Office
Phone: 020 7215 5946