August 26 2010 - Earlier this month, the charity Age UK welcomed the Government's decision to consult on abolishing the
default retirement age (DRA) from October 2011, describing it as a 'huge victory' for older workers and a 'landmark' for UK society. The charity
argues that the economy, public finances and employers will all benefit from the proposed change. Age UK estimates that in 2009 about 100,000
workers over the age of 65 were forced to retire with employers using this mechanism as a short cut to shedding jobs.
The charity acknowledges that some employers’ organisations have cautioned there will be a negative impact on businesses.
However, it highlights the Government's own impact assessment that estimates employers will save £45 million in the first year, rising
to £71 million per year after ten years, set against one-off costs of approximately £38 million. The UK economy will also benefit
from the retention of skills and knowledge, plus an extra £79 million in tax revenues in the first year
and £132 million each year after a decade.
Age UK gave a robust response to other arguments against abolition of compulsory retirement put forward by employers’
organisations:
- "Scrapping the DRA will not 'line lawyers’ pockets'."Research suggests there will a reduction of between 200 and 400 cases
a year coming before employment tribunals. Abolition of the DRA will reduce bureaucracy and make employers less liable to compensation claims
arising from incorrect application of current complex procedures.
- "Older workers will not ‘work until they drop’."The average retirement age has increased since 2000, but remains
below the default age of 65 (64.5 for men; 62.4 for women). Abolishing the DRA will not affect existing procedures for assessing work performance.
It will still be possible to dismiss employees on grounds of capability or initiate disciplinary proceedings provided the decision is not based
on the person's age. Over 80 per cent of employers operating a mandatory retirement age already have performance management systems in place.
- "It will not be more difficult for employers to broach the subject of retirement." One of the objectives of the Government
consultation is to develop guidance about how best to initiate discussions about retirement and to minimise the risk of disputes. Research indicates
that 80 per cent of requests to continue working past retirement age are already accepted.
- "There will not be fewer jobs for younger workers." Age UK argues that there is no evidence that this change will
be to the detriment of younger workers. The concept of a finite job market can be challenged on several grounds: new graduates and experienced
older workers are unlikely to be competing for the same jobs; demographic changes over the next decade will result in fewer younger people
entering the workforce; many workers reaching their sixties choose to change jobs, downsize or go part time, creating opportunities for younger
employees.
Michelle Mitchell, director of Age UK commented:
"We have led a four year campaign to achieve this historic decision so Age UK is absolutely delighted that the Government
is setting a clear date for the abolition of this arbitrary and unfair law.
"Not only is this a huge victory for hundreds of thousands of employees who are at risk of being forced out of their jobs simply because
of their age, it is also a landmark achievement for the UK society in the progress towards a fairer and more age-friendly society.
"There’s overwhelming evidence to show that older workers, the UK economy, public finances and employers themselves will all benefit
from the announced abolition of forced retirement legislation. The Government has made the right call on forced retirement and we encourage
ministers to stand by it.
