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Removal of the Default Retirement Age

What might this mean for me?

The planned removal of the Default Retirement Age (DRA) is creating a lot of discussion. If implemented as planned, it will remove the need for employers to consider requests from those wanting to work beyond 65 as these employees will in many circumstances have the right to work on.

This will mean a phased in removal of the requirement for the employer to give six months notice to the retiree of the intended retirement date. Some occupations may still have a justifiable Compulsory Retirement Age (CRA), for example for physically demanding jobs. There will be a shift of the onus onto the employer to prove if older workers are capable of continuing in their role.

So if it is all still so uncertain at this stage, can you just ignore it? Or can you bring your pro-active approach to considering the possible impact on your future plans? How long is a piece of string? When will I retire?

Well here are some points you might want to think about: 

  •  Develop a dialogue with your employer (current or future as appropriate) about retirement plans – do you want to change your working pattern at a particular point? How does this fit in with the business needs? 
  •  If your 65th birthday falls between April and October 2011 take a look at the proposed transition arrangements on the Department for Business, innovations and skills website. 
  • What will the impact of working longer have on benefits such as life assurance, critical illness and medical cover? The jury is still out as to if it is unlawful to limit cover to employees beyond a particular age, and sometimes this is overcome by charging extra premiums.
  • Check out income protections policies that may pay out a proportion of salary until you retire. These may have changes introduced to pay out for affixed time instead. 
  • Employee share schemes – if these are part of the package in a new role you have landed, take a look at how they may be impacted if you work longer and what happens when you eventually leave – there can be a difference to taking these between if you are leaving or if you are retiring.
  • If you work later than originally planned you may wish to review how your money is invested in personal pension plans: notifying pension providers of planned retirement age influences when they transfer funds out of stocks and into cash. 
  • Some employers may still have CRA, for example in physically demanding jobs. Will you be affected, are there different roles in the organisation which might be suitable? 
  • Keep an eye on the proposed link between State Pension and earnings from 2011, will this change your plans? Check when is your State Pension Age. 
  • Be aware that retirement dates are likely to be less black and white in the future if these amendments come about.

The changes to the DRA are all in the planning and consultation stages at present, but it is good to keep abreast of government guidance to employees but also to employers on how “phased” retirement might be managed in the future. Keep an eye on future developments and consultation outcomes on the Department for Business, Innovation and Skills at