Government confirms end of default retirement age
The Government has said that, according to plan, the default retirement age of 65 is to be phased out between 6 April and 1 October 2011.
As a consequence, employers will no longer be able to let employees go simply because they have reached the male state retirement age.
The change means that, from 6 April 2011, employers cannot 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.
While after 1 October, employers will not be able to use the DRA to compulsorily retire employees.
Commenting on the announcement, Ed Davey, the employment relations minister, said that firms could still dismiss workers if it was felt they were no longer capable of performing their duties.
The minister commented: “I think this change is really beneficial and should not be the problem some people suggest.
“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.”
The decision to scrap the default retirement age was made in response to a combination of a shortfall in pension savings and the increasing longevity of the UK population.
Employers will continue to be allowed to run with a compulsory retirement age for employees provided there is an objective business justification for doing so.
The Government has promised help for employers in dealing with the move.
It has published new guidance on the change as well as guidelines setting out how employers can manage without fixed retirement ages and benefit from the employment and retention of older workers.
The Coalition has also pledged to remove the administrative burden of statutory retirement procedures. With the DRA dropped, it said, 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.
Also to come into effect will be an exception so that there are no unintended consequences for employers who voluntarily offer group risk insured benefits (income protection, life assurance, sickness and accident insurance, including private medical cover).
The announcement coincides with the publication of the new Pensions Bill which includes a proposal to raise the state retirement age to 66.