The government has confirmed that it will remove the Default Retirement Age so that people have more choice when to stop working.
Ministers have decided to proceed with their plan to phase out the DRA between 6 April and 1 October 2011. Currently the DRA enables employers to make staff retire at 65 regardless of their circumstances, but the government feels the rules must change as people are living longer, healthier lives. Ed Davey says, “Retirement should be a matter of choice rather than compulsion – people deserve the freedom to work for as long as they want and are able to do so. Older workers can play an incredibly important role in the workplace and it is high time we ended this outdated form of age discrimination. We are putting in place support to help business adapt to the change, but it is important to remember that about two-thirds of employers already operate without fixed retirement ages - and many of those with retirement ages already offer flexibility for workers to work longer."
The government has published new Age Positive guidance setting out how many employers manage without fixed retirement ages and benefit from the employment and retention of older workers.
The government will introduce an exception so that there are not unintended consequences for employers that currently voluntarily offer group risk insured benefits (income protection, life assurance, sickness and accident insurance, including private medical cover.
Although the Government is removing the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it. Examples could include air traffic controllers and police officers.
Most insurers have limits for accepting new business based on the default state retirement age of 65 and may policies also assume that people will retire by 65.
There is now no real justification for insurers to have upper age limits-if a person is fit enough to work-they are fit enough to be insured.
The change has come much faster than expected so insurers need to make changes fast.