Abolition of default retirement age will impact on youth employment

The default retirement age of 65 has been scrapped completely after being gradually phased out since April.

The new rules mean that employers are no longer obliged to give an employee their p45 when they reach the age of 65.

However, some experts believe that around ten per cent of firms will encourage workers to leave at a certain age by offering them a “golden goodbye”, an incentive to leave.

From April, when the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 began to phase out compulsory retirement at 65, the rules changed.

Employers can still ask employees to leave their employment at 65, but this would have to be justified for other reasons, apart from age alone. Employers will no longer be able to issue a six-month notification for compulsory retirement.

The announcement has caused concerns amongst employers of how they will be able to control and formulate staffing policies. Many are worried that they could be open to accusations of unfair dismissal and have employment tribunals brought against them.

Katja Hall, CBI Chief Policy Director, said: "In the absence of a default retirement age, the Government must act now to spell out how employers can have a protected conversation about employees' retirement plans without fear of tribunals.

"The Government has dithered too long on this issue. The Default retirement age was valued as it helped employers to plan ahead and manage changes to the workforce. We urgently need an effective new framework for retirement planning."

The move could also make employment prospects for young people even more difficult. The UK currently has high levels of youth unemployment and at a time when job opportunities are few and far between, older employees putting back retirement will mean that employment opportunities for younger people to replace older retiring workers will be less.

However, Age UK said that firms should focus on the skills and experience that older employees bring to a business.

Meanwhile, a separate survey from Age UK says that David Cameron has lost popularity with women over the age of 55, because of the controversial proposals over increasing the retirement age for women. This will involve many women currently aged between 55 and 60 waiting up to two extra years to receive their state pension.

Michelle Mitchell, Charity Director at Age UK said: “Many women in their late 50s are deeply worried to hear that they could have to wait a further two years for their pension than they had planned and angry that the goalposts have been moved in a way that has not given them enough time to prepare for retirement.

"At the moment there has been a lot of talk about concessions to the Pensions Bill which could smooth the transition. If this is true the Government should clarify what these changes will actually be.

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