Retirement age to be scrapped

29 July, 2010

The default retirement age could be scrapped by as early as October 2011, meaning workers will no longer be expected to retire at the age of 65.

In a consultation paper to be launched later today, the government will solicit opinions from industry about the suitability of removing the default retirement age.

Ian Naismith, head of pensions market development at Scottish Widows said the announcement was a “positive step” in making many people realize they would have to work past 65.

“We live in an increasingly ageing society and coupled with the economic environment of recent years it is not realistic to force people to retire at a certain age, many of us will have to work longer to ensure we have a comfortable retirement,” he said.

He added the move would allow workers greater flexibility in choosing when to retire.

Phasing out the default retirement age is a key part of the coalition government’s pensions policy and was included in both parties’ manifestos.

But the plan has been criticised as raising many issues for employers, which may be difficult to resolve.

John Cridland, deputy director-general of the Confederation of British Industry, said the short timetable to the scrapping of the retirement age would give companies little time to prepare for the impact of such a change.

“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 in the law to deal more effectively with difficult employment situations,” he said.