Review could signal end of compulsory retirement age

The government’s announcement that it is to bring forward a planned review of the default retirement age could mean that employers may lose the right to force staff to retire at 65.

Ministers had intended to look again at the default retirement age in 2011 but decided to hold the review next year because of “changing demographic and economic circumstances”.

Under the current regulations, employers can oblige employees to retire at 65 whatever their circumstances, but the move to conduct the review a year ahead of schedule suggests that the government is considering scrapping the default age.

Angela Eagle, the Pensions Minister, said: “Some people prefer to take early retirement, others prefer to keep working. We want to give older people flexible retirement options.

“The government is responding to the changed economic landscape. The different circumstances today – for businesses, and for individuals coming up to retirement – suggest that an earlier review is appropriate.”

The minister added that, as Britain’s demographics change, it is sensible to have a debate on what works for business and individuals, and to make sure that the retirement laws reflect modern social and economic circumstances.

Brendan Barber, the TUC’s director general, welcomed the announcement.

He said: “It cannot be right that an employer can sack someone simply for being too old. Employees should have choice - neither forced by employers to give up work, nor forced by inadequate pensions into working longer than they should.

“A key challenge as we live and stay active longer is developing the right kind of jobs, support and training for older workers.”

But the CBI expressed worries that abandoning the default age will add a burden to many employers, especially among smaller firms.

Katja Hall, the CBI’s director of HR policy, commented: “The government said its review of the default retirement age would be in 2011, and now it has changed its mind. This is disappointing; especially at a time when so many businesses are under pressure.

“Having a default retirement age helps staff begin the process of deciding when it is right to retire, and helps firms plan ahead with more confidence.”

The CBI argued that the current law allows any employee to ask to work beyond the age of 65, a request that must be considered by their employer.

CBI research has shown that 81 per cent of these requests are accepted.

Ms Hall continued: “Some people can happily work in their existing job beyond the age of 65, but this is not possible for all occupations, and companies with small numbers of staff have particular problems adapting jobs to the needs of older workers.

“No-one has yet suggested a workable alternative to the default retirement age.”

However, Dianah Worman, diversity adviser at the Chartered Institute of Personnel and Development, backed a possible move to abolish the default retirement age.

She said: "The economic situation and panic about pension income means maintaining the default retirement age is unsustainable. We never supported its inclusion in the Employment Equality (Age) Regulations 2006 because strong demographic evidence made it nonsense.

“In these tough times the government has no choice but to bring this review forward to help organisations make better use of the talent, skills and knowledge of experienced older employees, but also to help supplement their diminishing pensions."