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Time ticking on default retirement age

Time ticking on default retirement age

Category: Pensions

Updated: 29/07/2010
First Published: 29/07/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The default retirement age (DRA) is to be consigned to the history books by October 2011 under new Government proposals.

The new plans allow for a six month transition from the existing regulations, following the announcement in the recent Budget that the DRA would be phased out from April 2011.

Currently, employers are permitted to make staff retire once they reach 65, regardless of their circumstances, but this is to change as people are living longer, healthier lives.

The Government said the move is just one of the steps being taken to help and encourage people to work for longer against the backdrop of demographic change.

Others include reviewing when the state pension age increases to 66 and re-establishing the link between earnings and the basic state pension.

"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," commented Employment Relations Minister, Edward Davey.

"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."

The ruling will no doubt be popular with workers keen to continue working, but it has no been universally welcomed.

"For employers, these proposals could make workforce planning and providing some employment benefits, such as critical illness cover, next to impossible," said John Cridland, CBI deputy director-general.

"A default retirement age helps staff think about when it is right to retire, and also enables employers to plan more confidently for the future. In certain jobs, especially physically demanding ones, working beyond 65 is not going to be possible for everyone."

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