Paul Lewis
From next April companies will no longer be able to tell employees when to retire. At present the so-called "default retirement age" is 65, writes Paul Lewis
An employer cannot set an earlier retirement age than that. However, if a company clearly states that it is 65 (or a later age), then it can insist that all staff leave on that birthday.
But not for long. The new Government has stated it will “phase out the default retirement age from April 2011”.
Iain Duncan Smith, Secretary of State for Work and Pensions, told a meeting of pension professionals and journalists in June: “I am absolutely convinced this is the right thing to do. A default retirement age offers companies an excuse not to think constructively (about their older workers).
“Offloading people because they are 65 speaks badly of management. Why should businesses need government to regulate when they can retire people?”
So the regulation is going, which will mean that from April next year – perhaps with some phasing-in provisions – no employer will be able to sack an employee just because of his or her age. And about time too.
The new Government is also determined to increase the age at which the state pension is paid. Current plans would raise the age to 66 from April 2024, with further rises to 67 and 68 completed by 2046.
But the coalition Government wants to do it more quickly, starting to raise the pension age to 66 from 2016 for men, with women following in 2020 as their own state pension age reaches 65. After that the age would be increased further and more quickly than the last Government planned. Iain Duncan Smith has said it might even rise automatically as life expectancy grows. Men reaching pension age can now expect to live to just over age 86 and women to almost 89 – around a third of their adult life.
The Government wants to hear your views, but get your skates on as the closing date is August 6, 2010.
Download the consultation document at dwp.gov.uk/docs/spa-inc-to-66-call-for-evidence.pdf, or email the team at spa.review@dwp.gsi.gov.uk
Written by Paul Lewis, this article was first published in the August 2010 issue of Saga Magazine. Paul's opinions are his own and for general information only. Always seek independent, professional, financial advice.