No longer being forced to retire at 65 – the bigger picture

Published on 5 November 2010

The Government recently consulted on proposals which will prevent employers, except perhaps in exceptional circumstances, from forcing employees to retire at age 65. This is of course coupled with confirmation in the recent Spending Review to step up the escalation in state pension age for both men and women to 66 by 2020. LITRG makes a number of points in response as to the impact of the line between working and retirement age becoming increasingly blurred.

The consultation from the Department for Business, Innovation and Skills begins: ‘People today are living longer and enjoying healthier, more active lifestyles’. Whilst this may indeed be true for some, it is equally true that others – particularly in manual, lower income jobs – may not be as healthy or able to continue doing their job in later years.

Whilst we agree there should be no reason to force people to retire at a certain age if they do not wish to, continued working might be impossible for some and others might need training and support to move into a different type of work. We therefore suggest that one way of so doing might be to introduce some form of incentive – such as a tax relief – for employers to offer training to older employees to allow them to move into new positions for which they are better suited in later life.

Moreover, it is vital to ensure that guidance and support is provided so that individuals can make fully informed decisions about staying on at work beyond the ‘traditional’ retirement age. In so doing, people must ensure they have considered all the knock-on effects in terms of their finances and pension options, including taxes and state benefits. And as noted in our response to the Department for Work and Pensions’ recent ‘21stCentury Welfare’ consultation, the Government will need to give further consideration to the transition between the proposed new ‘Universal Credit’ for those of working age to retirement age benefits.

In summary, our response recommends that a working group is set up to look at the issues and ensure that adequate guidance is in place. This work will need to begin immediately in view of the proposed challenging implementation timescale to phase out the default retirement age from 6 April 2011.

Read our full response to the consultation on the submissions page.

(05-11-10)

Contact: Kelly Sizer (Tel: 0844 579 6700 Fax 0844 579 6701)