Working past 65: Government to scrap default retirement age

The Government is pushing through its plan to scrap the DRA - without many concessions to nervous employers.

by James Taylor
Last Updated: 19 Aug 2013
The Government confirmed today that it will scrap the default retirement age from October 1, meaning firms will no longer be able to force staff out when they hit 65. Employers' groups don't like the move - largely because they're worried that it will mean more complicated red tape, at a time when flexibility is of the essence. But the basic argument seems hard to dispute: is it really fair or even sensible to force staff out at this arbitrary point, regardless of whether they're able or willing to keep working?

Announcing the move (which isn't exactly a surprise, since it was in the Coalition agreement), the Government said it would give people more freedom of choice, and boost the economy by expanding the workforce and allowing firms to tap into the skills of older staff for longer. Although it's worth pointing out that only about one in three firms actually choose to enforce the DRA anyway, so the change won't be entirely revolutionary.

We're inclined to agree with the CIPD on this one. 'The existence of the DRA has acted as a smokescreen and easy get-out clause for poor management for far too long,' the lobby group said today. 'Age is not a key determinant of capability... Poor performers can and should be tackled by managers regardless of their age'. If someone can do the job, why should they be forced to leave because they hit an arbitrary age limit? And if they can't, they should be managed out of the business anyway. The DRA just allows employers to skirt around performance issues for anyone approaching 65.

On the other hand, this is a lot more straightforward in principle than it is in practice, of course. Employers' groups have been calling for the move to be delayed, so employers can get all their legal ducks in a row first. After all, if businesses now have to use other mechanisms to remove older workers no longer able to do the job - like 'capability reviews'- they need to be clear on exactly how these work.

And then there's the question of what this will mean for youth unemployment, already at worrying levels. On the Today programme this morning, minister Ed Davey rambled rather incoherently about how scrapping the DRA would actually lead to more growth and more jobs. But not everyone's convinced; after all, some firms have been using the DRA as an opportunity to bring in (cheaper) younger staff to replace retirees. Could it be that fixing one problem just creates another?

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