End of default retirement age confirmed
After much discussion and speculation, the government has finally confirmed that the Default Retirement Age (DRA) will be phased out this year.
From April 6 to October 1 2011, employers will only be able to enforce retirement upon those who a) were informed of this decision prior to April 6 and b) will be retiring before 1 April. From October 1 onwards, employers will be unable to enforce retirement due to DRA.
The change in policy has been implemented by the government, largely to counteract pension shortages caused by an ageing population. Ed Davey, the employment relations minister, has commented that this is “great news” for older people, business, and the economy and feels that the change will boost the labour market overall.
Davey’s thoughts will ring true for Age Campaigners who have been battling for the end of DRA for some time, arguing that many mature workers are both able and willing to work past 65.
However, not everyone is pleased by the scrappage; concerns have been raised from various employment bodies, for example John Cridland from the CBI, who states that “There is not enough clarity for employers on how to deal with difficult questions on performance”. With many individuals and organisations publicly voicing these concerns, it is assumed that the government will be forced to provide both employees and employers with greater clarity in the forthcoming weeks.
In addition to the DRA announcement, today brings the publication of the Pensions Bill, which states that companies will be required to enrol staff in pension schemes. For many large firms this will mean reducing their contribution to current schemes as they will be making contributions for far more employees. For smaller firms, many of whom are already facing a worrying year ahead, this may be another financial concern to add to the pile.
