• A Retirement Revolution: Life after the Default Retirement Age Survey
  • October 5, 2011
  • Law Firm: Norton Rose Canada LLP - Montreal Office
  • Introduction

    The default retirement age (or DRA) is something UK workers have lived with since 2006, when the Employment Equality (Age) Regulations 2006 made it possible for an employer to lawfully dismiss an employee by reason of retirement where the employee had attained the DRA of 65.

    A legal challenge by Age UK followed, arguing that the DRA breached EU regulations. This failed, but in 2010 the coalition government announced it planned to scrap the DRA. The legislative process duly worked its course and complete abolition of the DRA took effect on 1 October 2011. Although some employers may continue to have a compulsory retirement age, they must be able to prove that it is justified if challenged at an employment tribunal.

    Employers have now had time to consider the effect of the new legislation, and begin to adapt to a working world without enforced retirement. We felt it would be an opportune time to find out what shape that new working world is taking. How are employers reacting to the changes, and what does it mean for their employees? We undertook a survey asking those questions - the findings have confirmed some of our assumptions, and provided one or two significant surprises. This report outlines them all.

    Key findings

    Responses to the survey highlighted significant issues for employers as the default retirement age ends:

    • A significant majority (70%) have altered the terms of employment to remove the default retirement age. Only 3 per cent intend to retain a default retirement age.

    • 86 per cent of employers are letting employees over the age of 65 continue in the same role. Nearly half were also considering flexible working arrangements for over 65s.

    • More than three quarters of those considering more flexible working arrangements for over 65s are considering allowing employees to work reduced hours or part time.

    • A¬†significant minority (27%) of respondents confirmed that they had not changed the way that they discussed retirement with employees. Of those that have, nearly half said that they now wait for individual staff to bring up the issue of retirement rather than approaching the issue with employees. A quarter said that they now approach the issue through the appraisal system.

    • 76 per cent of respondents have not given their line managers access to any additional training on how to deal with retirement conversations.

    • Nearly half (46%) of respondents felt that the phasing out of the default retirement age would have a negative impact on their business. Employers believe that it will make it more difficult for them to manage older members of staff out of the business. 22 per cent say they will now have less capacity to take on younger members of staff.

    Although they have taken the initial steps required, many employers are still deciding how to respond to the legislation, in particular the effect on performance management policies and how to conduct retirement discussions. Of the respondents, 7 per cent had a workforce of which 15 per cent or more are currently over the age of 60.