Retirement Age Lives On

How will you handle staff retirement planning in your workplace? From April 2011, the Government will remove the idea of a normal retirement age at which an employer can require staff to leave. Will that be a major problem for most employers? That is unlikely in view of the following points

Sharing/discussing retirement plans is not discriminatory

  • managers can still ask staff to share their retirement intentions with them to help the organisation plan for the future.
  • many staff will still want to retire around the age of 65 but may welcome the flexibility to stay on for a few months or a year or so.
  • should significant performance issues arise, the normal route of dealing with such concerns can still be taken.
  • Some types of role may pose more issues – those are noted later.

Ways to encourage staff to think about retirement and share intentions should be explored. Useful ways are:

  • remind staff that they can obtain estimates of their state and occupational pensions – this may give them more confidence in firming up a retirement date.
  • encourage them to join a pension scheme – it is surprising how many staff do not realise the value of the benefit.
  • consider whether opportunities for part time working or relief cover would be beneficial to the company and the individual after ‘retirement’ or as a lead up to leaving completely.

Some occupations may require more monitoring of the health of individuals to minimise safety issues. For example driving LGVs although there are existing medical requirements, managers should review how they monitor the health of all staff and take note of the recommendations in Health and Safety Executive guidance etc.

Involuntary retirement

From 6th April 2011, employers will be liable for claims of age discrimination and unfair dismissal, if an individual is forced to retire unless there are objective and justifiable reasons for compulsory retirement. Setting retirement age and enforcing that may still occur but in narrower circumstances such as:

  • occupations in which health and safety due to mental and physical demand is crucial
  • the need to re-balance the skills and plan succession
  • all must meet the criteria that an enforced retirement age is a legitimate aim and a proportionate means of achieving that aim.

The latter point means that if there are other options available to achieve the same ends, then a compulsory retirement age is likely to be discriminatory.

Insurance costs

The cost of providing certain benefits to older staff can be very expensive. The new regulations allow insurers and employers to set age limits beyond which certain types of benefits may cease or be modified. Examples could be permanent health insurance (sometimes referred to as long term disability insurance), private health insurance , sickness and accident insurance. At the moment, the draft regulations may limit this to group risk insurance based benefits for which the age of 65 is set but note that this will rise in line with increases in the state pension age.

Avoid being caught out by your own policies

It is surprising how many employment policies and benefits contain age related clauses. You should begin to review policies and benefits to determine which ones contain:

i) retirement or cut off ages that may be construed as retirement ages and

ii) whether those are justifiable as noted above or come within the exceptions for benefits.

If point ii) does not apply, then you should begin to revise the affected policies and benefits to ensure that they do not discriminate. You should take a wide view of such issues, for example, the following may be affected – share schemes, pension scheme trustee appointments.

Source: The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011

Watch out for our survey on workforce planning and retirement issues as participants will be able to receive a free report.

© 2011 HR Management Dimensions Ltd.

Web site:   www.hr-management-dimensions.co.uk

Leave a Reply

Your email address will not be published. Required fields are marked *