Default retirement age end hailed

Age equality campaigners in the UK last Friday hailed the end of employment rules forcing people on to the ‘scrap heap’ at the age of 65.

To think it’s normal to be paid not to work for decades, it’s not really sensible

Bosses from tomorrow will no longer be able to set a mandatory retirement age, as the British government brings in changes to reflect people living longer and healthier lives.

A phasing out period of the default retirement age (DRA), which enables employers to force staff to retire at 65, is completed this weekend.

Liz Field, chief executive of the Financial Skills Partnership, said greater age diversity would make a more productive workforce.

She said: “In these difficult economic times, older workers can add resilience to a business’s workforce, offering a vital blend of hard-soft skills that allow them to react in a more productive manner to economic crises.”

However, some businesses have expressed strong reservations, particularly over how smaller firms will cope. John Walker, national chairman of the Federation of Small Businesses (FBS), said the organisation was disappointed to see the DRA scrapped and feared it could trigger costly legal battles.

He said: “This will also add to the fears of more employment tribunals if an employer does need to dismiss an underperforming member of staff.

“The FSB believes the default retirement age should be raised in line with increases to the state pension age to take into account an ageing population.”

He said many small business owners do not intend to retire their staff at 65 and understand the “valuable contribution” older workers bring.

The FSB said it was also concerned that the move could lead to fewer incentives or opportunities to hire and train younger workers.

Mr Walker highlighted an FSB survey showing 70 per cent of respondents employ staff over 50 years old and a quarter employ staff aged over 65.

CBI chief policy director Katja Hall said: “The government has dithered too long on this issue. The DRA was valued as it helped employers to plan ahead and manage changes to the workforce.

“We urgently need an effective new framework for retirement planning.”

Employment Relations minister Edward Davey said it was important to remember that around two-thirds of employers already operate without fixed retirement ages – and many with retirement ages already offer flexibility for workers to work longer.

He 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. “This is an example of the state getting out of the way and having modern workplaces for modern times.”

The new measures, which have been phased in over a six-month period from April, allow for a few exceptions, such as police officers and air traffic controllers.

Saga director general Ros Altmann described fears that the change could bar younger people from finding jobs as a “fallacy”.

She said: “If you have got more people working at any age they will have more money to spend and create jobs for more people...

“Everybody loses if you force people out of work, when it’s a growing proportion of the population.

“If someone is still working they’re creating wealth somewhere in the economy.”

Economist Dr Altmann called for a change in attitude.

She continued: “Very often people write themselves off in later life.

“Many people take on society’s attitudes and that’s not healthy, especially in an ageing population. Why would you want to throw yourself on the scrap heap if you have 30 or 40 years of life left?

“To think that it’s normal to be paid not to work for decades, it’s not really sensible.

“People are much fitter and healthier and live longer than past generations could have imagined.”

Saga has published on its website guidance for employers and employees on working life after the DRA officially ends.

Denise Keating, chief executive of the Employers Forum on Age, described the move as “an incredible leap forward”.

She said: “After years of campaigning, we are, at last, at a stage where it is fundamentally discriminatory to force someone to retire just because they reach 65.”

TUC general secretary Brendan Barber has said the move would help stop employers dismissing people arbitrarily.

Age UK’s charity director Michelle Mitchell said: “We have seen a very small improvement over the past five years but, as the statistics show, not nearly enough.