Employment Law Update August 2009: Retirement age review to take place in 2010

The government has recently announced that a review of the default retirement age is to be brought forward by a year in response to changing demographic and economic circumstances where an ageing society and diminishing pension funds means that many workers may be forced to work beyond the current retirement age of 65.

Currently, most workers retire at or before the age of 65, but research indicates that 1.3 million people still choose to work beyond retirement age.

Do I have to retain an employee past the age of 65?

Currently, the default retirement age of 65 means that an employee will retire on their 65th birthday, subject to their employer following the relevant processes surrounding retirement. There is no obligation on an employer to retain staff over the age of 65.

When will the law change?

A review is due in 2010 and it is anyone’s guess as to when any change will take effect.

What are the implications for my business?

There may be a requirement for employers to prove that an individual is not capable of fulfilling their contractual role over the age of 65. We are an ageing population and must start to recognise the benefits of retaining an older workforce.

What are the benefits of an ageing workforce?

Older workers bring a wealth of talent, skills, experience and cultural balance to the makeup of an organisation. We need to start thinking differently about this issue – the leading companies will already have a structured plan in place for promoting and recruiting the older workers. Don’t be left behind by your competitors!

When and how do I introduce the changes?

We will know more about specific timescales after 2010 but the smart companies will start working on their new retirement policies now in advance of the changes.

What are the associated risks for employers?

You will have to follow relevant legislation or face potential claims but best practice would suggest that the biggest risk you face is the talent your business could lose if you automatically retire staff at 65.

If you would like P3 People Management to assist you with advice on how to deal with retirement related employment issues, please do not hesitate to contact us at info@p3pm.co.uk