Fixed retirement age to be scrapped in 2011

29th July 2010

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Plans to end the Default Retirement Age (DRA) from October 2011 have been outlined in a consultation document published today by the government.

Under the measures, starting in April next year, employers will not be able to dismiss staff because they have reached the age of 65.

The only obligation an employer will have it to hold a meeting with the member of staff to discuss plans at least six months ahead of their 65th birthday.

The government said it is one of a number of proposals it is making to help and encourage people to work for longer against the backdrop of demographic change.

Further steps include a review of when the state pension age should be raised to 66 and re-establishing the link between earnings and the basic state pension.

Consultation will run until October and proposes to help employers by omitting the administrative burden of statutory retirement procedures.

Campaigners have welcomed the move, but employers have warned the removal of a DRA could have an impact on workforce planning.

The Chartered Institute of Personnel and Development (CIPD) welcomed the announcement, adding that following many years of campaigning to remove the DRA it was "delighted" with the "breakthrough".

However, the CBI was cautious of the speed of the proposed changes suggesting it left firms "with many unresolved problems".

The proposals were part of the coalition government's agreement, and had been included in both the Conservative and Lib Dem manifestos.

Speaking to the Today programme this morning, employment relations minister Ed Davey said the government is committed to the principle of change.

"People are living longer lives, they are living healthier lives and we think it's out of date to force them to retire at 65. We want to end this discrimination," he said

"We want to allow older people to make that contribution to our economy, to our society and actually to be able to save more for their retirement."

The DRA has been challenged repeatedly in the courts by campaigners who believe it has been unfair to experiences workers who may have no problems in continuing tin their jobs.

In an interview with the Independent, pensions minister Steve Webb admitted that people will have a "hell of a shock" when they reach retirement age because of their failure to save.

He said that the that the basic state pension of £97 a week is "not enough to live on", and confirmed that the government would raise the state retirement age to 66 earlier than planned.

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