Chancellor Alistair Darling has confirmed in the budget that the government is looking at options for reforming the law on employees retiring at 65, including scrapping the default retirement age altogether. But how likely is this?


Heyday challenge
Age Concern and Help the Aged lost their challenge to the default retirement age (DRA) in the High Court last September, but the court made it clear that there should be a review of the DRA arrangements. The government committed to do this by the coming summer.


Research
Age Concern and Help the Aged are challenging all political parties to commit to scrapping the default retirement legislation. The charity’s research shows that use of the mandatory retirement age as a reason for terminating employment soared during the recession, with over 100,000 people being forced to leave on or after their 65th birthday. This contrasts with the charity’s findings that 60 per cent of over-50s expect to work longer than they originally planned, mainly because the economic downturn has led to a rapid decline in the value of their savings and pensions.


Cheap alternative
The forced retirement figures suggest that employers have used the DRA as a cheap and easy alternative to redundancy during the recession - presumably not the original purpose behind the legislation.

Some employers have already scrapped the default age – JD Wetherspoon and Nationwide, for example. But others maintain strong resistance to removing the DRA, arguing that keeping older workers in employment deprives younger workers of opportunities.

Totally scrapping the DRA, in the short term, is therefore unlikely. But it is likely that, after the election, whichever party is in power will increase the DRA to 68 - in line with the rise of the state pension age - or even to 70.

Making the removal of the DRA a longer-term option gives employers more time to get used to using performance management procedures to manage their workforces, rather than relying on retirement as a reason for dismissal.


The Employment Equality (Age) Regulations:
• came into force on 1 October 2006;
• contain a DRA of 65 (employers can fairly dismiss employees at that age, or afterwards, by reason of retirement);
• make retirement at younger than 65 unlawful unless employers can objectively justify it; and
• introduced a new statutory right to request to work beyond the age of 65, which must be considered by employers.