But what does that actually mean for us? Is it really such a good thing to get rid of the DRA? Won’t it mean we have to continue working for longer? And what about younger people – surely that will harm their job prospects?
We’ve put together some of the most common questions around scrapping the Default Retirement Age to help you understand all the issues involved.
Q: What is the Default Retirement Age (DRA)?
A. Implemented in 2006, the Default Retirement Age (DRA) meant that employers could force their employees to retire at the age of 65. Employees could request to stay on after this age but employers could refuse these requests if they wished to.
In January 2011 the Government confirmed that they would be pressing ahead, as planned, with the abolition of the DRA. So from 6 April 2011, employers were no longer able to issue retirement notices to their employees.
Q: Why and when was the DRA scrapped?
A. Age UK campaigned for the abolition of the Default Retirement Age, which was announced in July 2010. The Government recognised the inherent unfairness of the policy and agreed with Age UK that individual choice of when to retire is of the utmost importance. Besides, the UK’s workforce is ageing and it is counterproductive to restrict the work that people can do by an arbitrary measure such as age. It is a win-win-win situation for individuals, employers and the Government.
On 13 January 2011, Employment Relations Minister Ed Davey confirmed that there would be no delays to the abolition of the Default Retirement Age. Some groups argued against this change, but the Government’s announcement included its response to the public consultation and confirmed that the abolition of the Default Retirement Age would go ahead as planned.
Q: Why did Age UK want the Government to scrap the Default Retirement Age (DRA)?
A. The DRA gave older workers second-class employment rights and takes away their freedom to plan for retirement at a time when they need it most.
Forcing people in later life out of the labour market when they want to work, save for their pensions and pay taxes is nonsense and it makes a mockery of the government’s attempts to extend working lives.
Scrapping the DRA does not mean that anyone has to stay at work if they don’t want to, but it gives employees the chance to stay in work beyond 65 if they are still willing and able to do their job.
Q: Who will benefit from scrapping the DRA?
A. Our research shows that an estimated 100,000 workers were forced to retire in 2009 alone. The harm this causes to those who wish to work beyond retirement age, both financially and in terms of the impact on the person’s self determination, should not be underestimated.
With the DRA gone workers aged 65 and over will have the same job security as younger workers for the first time. Getting rid of the DRA will also help change views about the retirement process, encouraging employers and workers to be more positive about the contribution people can make in their late 50s and 60s. We need to move beyond the current ‘countdown culture’, in which the value of an employee is thought to lessen simply because they are growing older.
In addition, the Government will also benefit from increased numbers of older workers paying tax, and a reduction in benefits paid out.
Q: Won’t abolishing the DRA force people to work longer?
A. No. Our campaign is about choice. We believe people in their 60s should have the right to work and the right to stop. The legislation we are challenging only affects those who wish to work over 65. It will have no impact on the age at which people become entitled to occupational or state pensions.
Q: Do older people really want the Default Retirement Age to be abolished?
A. Our research shows that 9 out of 10 people aged 60-70 are against forced retirement while two-thirds of the public would like the Government to abolish this legislation immediately.
Q: What about young people who can’t find work? This will just make the issue of ‘job blocking’ worse, won’t it?
A. There is not a shred of evidence this will actually happen. Most economists agree that the job market doesn’t work on a one-in, one-out basis. When more people are in work, people have more money to spend, and this creates more jobs.
Past initiatives to create jobs for young people by inviting people to retire early did not work. In 10 years, half the British population will be over 50 and the number of young people entering the workforce is already beginning to decline, so there will be fewer people chasing promotions in future. Many older employees reaching their 60s choose to change jobs, downsize or go part time. Today’s employers surely want to recruit the best person for the job, irrespective of their age.
Q: If the reason for abolishing the DRA is that many people want to work for longer, what’s wrong with raising the State Pension Age (SPA)?
A. Although there’s a growing number of people planning to work past the current state pension age (SPA), there are still many people who look forward to retiring after a life of hard work. A sudden increase of the SPA will frustrate many workers’ expectations and scupper their retirement plans. Before rushing through any increase to state pension age, the government must address the problems of health inequalities between rich and poor, and create a much fairer job market for older people. Failure to do so will force millions of older people, many of them poorer and with lower life expectancies, to work for longer or face another year trapped in unemployed limbo.
Q: Will employers have to keep over-65s who are under-performing?
A. We are arguing that people over 65 should be treated in exactly the same way as people under 65. We are not arguing for special treatment and we respect the right of employers to decide what is best for their business, as long as it is not the result of discrimination or prejudice. That means employers should be able to make redundancies, dismiss people on grounds of capability or launch disciplinary proceedings – as long as their decision is not based on someone’s age.