01 March 2010 #Employment
Thank you to everyone who responded to our recent survey on the default retirement age. The results made very interesting reading and, as promised, we have set them out here.
91% of those we surveyed operate a normal retirement age, with 100% of those having a normal retirement age of 65.
Our experience, backed up by the survey, is that businesses are becoming more aware of their obligations around the statutory retirement procedure. However, this is complex and we are seeing many tribunal cases being brought because of a small technical breach of the procedures, and very few where the employer has simply flouted the statutory obligations. We hope that the Government will review this process, although if the default retirement age is abolished this may no longer be required.
No respondents to our survey had a general policy of rejecting all requests to work past the normal retirement age, with most respondents considering each application on its own merits.
The majority of employers who do allow employees to continue to work do so because they value diversity and the experience older workers bring. It appears from the survey that businesses like having the option to make the decision to retire based on the performance and ability of the worker and the needs of the business at the time, whilst still being able to manage out those who are not performing or who the business no longer needs on a "no fault", amicable basis.
In our survey, the reasons given by business for mandatory retirement ages (with the most popular first) were:
For these reasons, despite valuing the retirement procedures themselves, 64% of respondents to our survey considered that the retirement age should not be raised or abolished.
It appears that businesses value a set age against which a retirement procedure can operate, but need it to have some flexibility to allow them to keep on employees should that be beneficial to both the business and the individual. This allows organisations to plan headcount and resources, and to match that against available resources. Businesses do not want to be in position of having to manage older, respected employees out of the business for capability reasons because they will not retire and there is no other mechanism for doing so. Going through a performance process is also more costly for businesses (in terms of both management time and the emotional cost) than retirement.
A significant impact of removing or raising the default retirement age is the question of employment benefits. Much insurance becomes significantly more expensive for employees over the age of 65. Not to provide this is indirectly discriminatory on the grounds of age, but with a higher default retirement age employers may find themselves faced with premiums so high that they are effectively self-insuring. Should the retirement age be abolished or raised, this must be addressed.
Most respondents recognised the contribution that older employees make to the workplace, citing experience, reliability, diversity and a return on the investment made in that individual. For this reason, it seems clear that the ability to retain employees through a retirement process is valued and businesses would not wish to see this procedure removed.
However, ministers have stated that the "long term aim" is to abolish to default retirement age, and age charities are campaigning hard for this. We will have to wait for the outcome of the consultation.