Retirement Age Should be Scrapped

By Fiona Nicholson, FT Advisor.com

January 28, 2010

United Kingdom

The default retirement age should be abolished to prevent an anticipated skills shortage, according to the recommendations of a report by the Equality and Human Rights Commission.

The 18-page report, entitled: Working Better, Phase Two, also recommended the extension of the right to request flexible working to all, the overhauling of employer recruitment practices to prevent discrimination and improved training and development.

The commission's proposals seek fundamental changes to employment policies, to increase work opportunities for older Britons and to address the challenges of an ageing workforce. 

Research from the National Institute of Economic and Social Research, showed extending working lives by 18 months would inject £15bn into the British economy. 

The new survey carried out for the Commission found that 24 per cent of men and 64 per cent of women plan to keep working beyond the state pension age. 

While the research indicated that employers are offering lower level, part-time work to those aged over 50, twice as many older workers are seeking promotion rather than wishing to downshift. 

Baroness Margaret Prosser, deputy chair of the Equality and Human Rights Commission, said the research showed that radical change is what needs to happen for older Britons to stay in the workforce. 

She said: "Employers with a focus on recruiting and retaining older workers on flexible working arrangements are telling us it makes good business sense, allowing them to recruit and retain talent while meeting the flexible needs of their customers. 

"Keeping older Britons healthy and in the workforce also benefits the economy more broadly by decreasing welfare costs and increasing the spending power of older Britons."

"To provide real opportunity to older workers, abolishing the default retirement age needs to be accompanied by a concerted drive by government, employers and agencies to meet the health, caring and work needs of the over-50s to enable them to remain in the workplace. Greater flexibility can help to deliver this."

Lee Smythe, managing director of London-based Killik Chartered Financial Planners said it was a positive move for employers to keep employees on beyond their retirement age. 

However, he said this would have implications for funding pensions and benefits.

Mr Smythe said: "One problem which may arise is that providers of death in service and health benefits may not be keen to provide these to employees beyond the age of 65. 

"Employers may not be able to find an insurer willing to do so and they may run the risk of discriminating against employees over the age of 65 if they are unable to provide them with these benefits."

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