Change in law for retirement plans
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by business editor Trevor Sturgess
Plans to scrap the default retirement age of 65 have received a
mixed response.
The Government has launched a consultation exercise with
business and other groups with the expectation that the age rule
could go by October 2011.
Currently employers can make staff retire at 65 regardless of
their circumstances but this is set to change as people are living
longer, healthier lives. Many also wish to work longer for
financial reasons.
The consultation also proposes to help employers by removing the
administrative burden of statutory retirement procedures. The
Government says that removal of the DRA means there is no reason to
keep employees' right to request working beyond retirement or for
employers to give them a minimum of six months notice of
retirement.
Alyson Howard, business development consultant with Kent law
firm Brachers welcomed the change, saying it was overdue. There was
no reason to "chuck out" people who were 65 when they were
perfectly capable of keen and able to make a contribution. She said
her firm employed a number of people over 65 who were doing a good
job.
And many older people needed to earn. "Many of us in the private
sector know we will have to work considerably past 65 because of
the performance of private pensions and their inadequacies," she
said. There was no reason why many people should not work when they
were in their 80s. There had been a lot of ageism in redundancy
decisions, she claimed. "It loses masses of experience and who are
the young people coming going to look up to?"
But the CBI said the decision would leave business with many
unresolved problems and the Government's timetable gave firms
little time to prepare.
"Scrapping the DRA will leave a vacuum, and raise a large number
of complex legal and employment questions, which the Government has
not yet addressed. This will create uncertainty among employers and
staff, who do not know where they stand," said John Cridland,
deputy director-general. “For employers, these proposals could
make workforce planning and providing some employment benefits,
such as critical illness cover, next to impossible.
"A default retirement age helps staff think about when it is
right to retire, and also enables employers to plan more
confidently for the future. In certain jobs, especially physically
demanding ones, working beyond 65 is not going to be possible for
everyone."
Meanwhile, almost two thirds (62 per cent) of the South East's
older generation never anticipate ceasing work completely,
according to an HSBC survey. Over a third (34 per cent) of the
region's 2,999,000 over 50s have taken the plunge and "career
shifted" in their later working years.
Thursday, July 29 2010
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