The default retirement age (DRA) will be no more by October 2011 thanks to proposals in a Government consultation.

The new plans set out a six month transition from the current regulations, which follow the announcement in the Budget that the DRA would be phased out from April 2011.

Staff can currently be forced to retire at age 65 regardless of circumstances, but longevity and medical advances have contributed to abolishing this rule.

The move is just one of the Government’s steps to help and encourage people to work longer in a world of demographic change. The Government is also reviewing when the state pension age should increase to age 66, and at re-establishing the link between earnings and the basic state pension.

The administrative burden of statutory retirement procedures will also be removed in proposed amendments in the consultation, as there is no reason to retain employees’ ‘right to request’ working beyond retirement or give them a minimum of six months’ notice of retirement without the DRA.

“With more and more people wanting to extend their working lives we should not stop them just because they have reached a particular age,” explained Employment Relations Minister Edward Davey. “We want to give individuals greater choice and are moving swiftly to end discrimination of this kind.”

Steve Webb, Pensions Minister, added that although the Government is moving to scrap the DRA, individual employers will still be able to operate a compulsory retirement age, provided they can objectively justify it.

“The consultation asks whether the Government could provide additional support for individuals and employers in managing without the DRA or statutory retirement procedure. This includes the possibility of future guidance or a more formal code of practice on handling retirement discussions.”

The consultation, which also looks to seek views on whether removing the DRA could have unintended consequences for insured benefits and employee share plans, will run from today (29 July) to 21 October 2010.

The Confederation of British Industry (CBI) said, however, that the decision leaves businesses with many unresolved problems, and the Government’s short timetable leaves little time for companies to prepare.

“Scrapping the DRA will leave a vacuum, and raise a large number of complex legal and employment questions, which the Government has not yet addressed. This will create uncertainty among employers and staff, who do not know where they stand. There will need to be more than a code of practice to address these practical issues; we will need changes to the law to deal more effectively with difficult employment situations,” explained John Cridland, CBI deputy director-general.

Share Story: