UK Abolishment of Retirement Age

The UK government announced on 29 July 2010 that it plans to scrap the default retirement age of 65 from October 2011. This means that in the future, employers cannot dismiss staff because they have reached the age of 65. The Employers Forum on Age (EFA) has described the new proposal as a “victory” against ageism. The law as it stands means that an employer can force an employee to retire at the age of 65 without paying any financial compensation. The only obligation for employers is to meet with the employee to discuss their retirement at least six months before their 65th birthday. At the meeting it is entirely at the employer’s discretion as to whether or not the employee must retire. A consultation process about scrapping the rule has begun and the dates state that the changes could begin from 6 April 2011.
This move that is being criticised by employers who believe that it will hamper the efforts of businesses to weather the recession and risk causing rifts among staff. However, there are also advantages in abolishing a compulsory retirement age. Retaining mature employees allows companies to retain their history of leadership skills. Particularly in the current economic situation, seasoned experience and historical understanding can be very advantageous for companies.
The European Commission is proposing that retirement lengths in countries across the 27-nation bloc should rise automatically in line with rising life expectancy. Where currently there are four people of working age for every one over 65, this number will be cut in half by 2060, making state pensions harder and harder to afford, a commission paper noted.