Fixed retirement age axed, but will we work longer?

The government has said it’ll phase out the Default Retirement Age (DRA) from April 2011. But what does this actually mean for you and me? In short, employers will no longer be able to force their staff into retirement just because they’ve reached their 65th birthday.

Of course, your boss can still impose a compulsory retirement age, but now they’ll have to justify this objectively – it could be argued that an elderly police officer can’t fulfil his/her job responsibilities, for example.

The good, the bad and the indifferent

Many have welcomed the move, but it’s been received less enthusiastically by the CBI (the voice of business) which claims it could make workforce planning ‘next to impossible’.

Axing the fixed retirement age comes hard on the heels of the announcement that the state pension age is likely to rise to 66 in just six years time. Many of us seem to be faced with a longer working life, but will we really have to ‘work till we drop’?

In my view axing the DRA is good news, but it might not be welcomed by everyone. By the time you’ve reached 65, you’re probably looking forward to retirement. And though the option to carry on might be nice, the real issue is sorting out your pension so you’ve got the luxury of choice when the anticipated/dreaded retirement day comes.

Problems with scrapping DRA

This relaxation of rigid rules mirrors a change that’s already well under way. More and more people are winding down to retirement, working fewer days and no longer stopping abruptly. This is fine on a voluntary basis, but until now it’s depended on an employer’s willingness to let it happen. In some ways it still will.

Employers who want to keep people on after 65 will still be able to do so, but those that don’t might not let you work anything other than full-time, or argue that you can no longer perform to a satisfactory standard. This could lead to very tricky situations.

Now we’ve got more choice

What’s undoubtedly true is that we’ll have more choice. You might carry on working full-time and defer your pension, or continue working on a part-time basis while taking a workplace pension. It depends on your circumstances, the nature of your job and the size of your pension.

Nobody knows how many people will keep their jobs past 65 as a result of this announcement. Decisions around retirement are already pretty complicated. Time will tell if they’ve just got any easier.

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