The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
The Government confirm that they will remove the default retirement age (DRA) so that people have more choice when to stop working. Currently the DRA enables employers to make staff retire at 65 regardless of their circumstances, but we believe that the rules must change as people are living longer, healthier lives.
Ministers have decided to proceed with the plan, set out in their consultation document published on 29 July, to phase out the DRA between 6 April and 1 October 2011. The Government’s written response to the consultation on the issue is being published today, alongside new guidance to help businesses adapt.
The Government will help employers adapt to the change. Steps we are taking include:
working with ACAS (Advisory, Conciliation and Arbitration Service) on new comprehensive guidance being published today;
publishing today new age positive guidance setting out how many employers manage without fixed retirement ages and benefit from the employment and retention of older workers;
removing the administrative burden of statutory retirement procedures. With the removal of the DRA, 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;
introducing an exception so that there are not unintended consequences for employers that currently offer group risk insured benefits (such as income protection, life assurance, sickness and accident insurance, including private medical cover). This is in response to concerns raised during consultation that removal of the DRA could put these schemes at risk.
Transitional arrangements are being put in place so 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.
Although we are removing the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it.
The measure is one of the steps we are taking to help encourage people to work for longer against the backdrop of demographic change. Others include raising the state pension age to 66 faster than currently scheduled and re-establishing the link between earnings and the basic state pension.