When do you want to retire? The glib answer would probably be “immediately”. But it’s a very active debate. The government has announced plans to abolish what is known as the DRA or “Default Retirement Age”. Put simply, employers can insist that you leave when you turn 65, whether you want to go and despite the fact that you may be taking valuable experience with you.
However, there’s been an outburst of anger against the CBI when it suggested that the reforms should be delayed. The employers’ organisation does have a point when it suggests that companies will face “huge uncertainty and greater risk of tribunal claims if the government does not tackle the unintended consequences of the decision”.
It says that the removal of the DRA will be one of the biggest changes to employment law in 2011. But the way things stand at present, the Government hasn’t explained the detail of what will be put in its place. It argues that the rules around retirement will be less clear for employers and their staff, and the resulting process potentially less dignified and more complicated.
Its director-general designate, John Cridland, said: “The ageing population and the shortfall in pension savings make it inevitable that people will want to continue working for longer. Employers understand this, and businesses value the skills, experience and loyalty that older workers bring.
“However, in certain jobs, especially physically-demanding ones, working beyond 65 is not going to be possible for everyone. The DRA has helped staff think about when it is right to retire, and has also enabled employers to plan more confidently for the future. With the scrapping of the DRA in April, a legislative void is opening up. We need to modernise our employment law framework to ensure that it is fit for purpose.”
That prompted howls of outrage from organisations like Saga. Its director general, Ros Altmann, dismissed the existing system as “a huge waste of our national resources. Longer working lives are an essential element of overcoming our pensions crisis … [People’s] pensions have not worked out in the way they had expected, and they are still fit and healthy. If they are forced out of the labour market, they will end up poorer in retirement and that will impact the economy as a whole, as they will have less money to spend. The timetable must certainly not slip.”
She insisted that employers should handle their workforce appropriately, not just sack people for being “old” when they still have so much to contribute. “The Default Retirement Age should have been abolished years ago. Ageism has no place in a modern labour market.”
Others agree with this assessment. Chris Ball, chief executive of The Age and Employment Network, argued that re-opening the debate on the DRA would be “backward looking and unhelpful”.
“The simple fact is that this is a wasteful provision that forces people to stop working when they are ready and able to continue. Moreover, most employers have shown that they don’t really need it. The CBI’s concerns about the diminishing work capacity of people doing heavy manual work is sometimes valid but it is a mistake to imagine that the only answer is in compelling people to leave the workplace when there are other jobs they could well do.”
Michelle Mitchell, charity director of Age UK, added that “very often, they are the people who need to work longer because they don’t have sufficient savings or pension arrangements. It is particularly important that employers and government address this challenge of supporting people to work longer in practical ways, by encouraging retraining and redirecting careers, for example. The sensible employer who values the skills and talents of older workers will be looking for ways of keeping these employees by making adjustments to their work and working conditions.
“Keeping an unfair and outdated legislation in place for one more year is not the answer; swift action by the government to provide businesses with the support they need is. There are many countries which manage perfectly well without a legal right to retire people, so why is the UK different?”
Even some successful entrepreneurs have dismissed the CBI’s thinking as “ridiculous”. Charlie Mullins has been in the news a lot recently because of the unusual way he runs Pimlico Plumbers. Over 20 per cent of his workforce are aged over 55 and many of them have no plans to go. He told the Fresh Business Thinking Blog that business organisations should be supporting the reform not disrupting its abolition.
He accused the CBI of “becoming increasingly irrelevant as postponing the scrapping of the default retirement age is not in the best interest of business. To say that firms have not had enough time to adapt to the brave new world where you only let someone go if they are no longer able to perform what they are employed to do is complete rubbish.
“Businesses need people who can do the job, whatever age they are. It’s about knowing when someone isn’t capable to do a particular job anymore. You don’t need guidelines and legislation for this, just effective personal management and a decent touch of common sense. There isn’t, has never been, and never will be, any replacement for experience and the sooner these clueless bureaucrats get that fact into their heads the better the country and the economy will be.”