Coalition Plans to Phase Out Default Retirement Age

The new coalition government’s legislative programme for employment law remains largely unclear. Much is likely to depend on how the tensions between the Conservatives and Liberal Democrats regarding their differing views on European Social Chapter legislation are resolved.

 

However, one thing we do know from the initial coalition agreement is that the new government is committed to phasing out the national default retirement age of 65. This is not surprising, in light of the intention to increase the age at which men can take their state pension to 66 from 2016. The same increase is planned to be extended to women from 2020.

 

It remains to be seen what shape the phasing out of the default retirement age will take. An obvious option is to increase the default retirement age in increments of a year or two at a time, before abolishing it altogether. It is therefore realistic to imagine that by the end of the next full session of Parliament, the current default retirement age of 65 may be gone. 

 

We remain reasonably confident that following the defeat of the Heyday challenges to the existing default retirement age, employers can continue for the time being to retire employees compulsorily at 65, subject to the statutory 'right to request' procedure. However, it was clear from the Heyday judgments that the UK’s social justification for a default retirement age of 65 is rapidly running out of time.

 

Prudent employers will therefore start planning soon for the likelihood of older workers remaining in the workforce for longer. This will have implications in the areas of recruitment, health screening and insurance benefits to name but three.

 

Just Employment Law is well placed to help your business to plan for these future changes by reviewing and amending your relevant policies and procedures.