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Employment Law

Retirement

Default retirement age

The default retirement age was set at 65 and was the age when an employee could be compelled to retire. The default retirement age has now been phased out. Employers can still set a compulsory retirement age for their employees if they can show a clear justification for it. Now that employees have the right to continue working without a default retirement age being imposed on them, they cannot be discriminated against if they choose to continue working, by for example not being considered for a promotion because of their age, unless this can be objectively justified.

The removal of the default retirement age does not inhibit employee’s right to decide when they want to retire, rather it gives them the option to choose when they want to retire and prevents employers from forcing employees to retire without objective justification.

Adjusting to retirement can be difficult for many employees. Therefore employers may want to consider phasing employees into their retirement. Further, if an employee requests this then it is part of a fair procedure for you to consider this.

When an employee is phased into retirement it is important for the employee to discuss and consider the effects on their occupational pension scheme if they have one, of working beyond the scheme’s normal pension age.

Retirement ends the employment relationship between the employer and employee and so it is important that as the employer you ensure the correct procedures are followed. This means following a fair process as well as providing the employee with adequate notice of the impending retirement.

Employer Justified Retirement Age

Employers can set a compulsory retirement age if there is a clear justification for it. For example, if the position occupied by the employee requires a significant level of fitness, for example as is the case in the emergency services, then a compulsory age of retirement is justified. In such circumstances the protection of colleagues and the general public would serve as the legitimate aim for the compulsory retirement.

The test of objective justification for compulsory retirement is not always straightforward and easy to pass. If an employee decides to challenge the justification then you will need to provide evidence to prove it is objectively justified and a proportionate means of achieving a legitimate aim, otherwise the compulsory retirement will amount to discrimination on the basis of age of the employee.

State Pension Age

The State Pension gives people of State Pension age a regular income to live on when they are no longer working. To be entitled to a State Pension your employees must satisfy the National Insurance contributions requirement. The age of retirement is not the same as the age at which a person can start to claim their State Pension.

The age at which a person can start to claim their State Pension is not a straightforward one. The State Pension age can be between 61 and 68, depending on the employee’s sex and the year they were born.  The current State Pension age for men born before 6 December 1953 is 65; for women born on or before 5 April 1950 the State Pension age is 60. Further, for women born between 5 April 1950 and 6 December 1953 the State Pension age is between 60 and 65. This is because women’s State Pension age is set to increase gradually. Both men and women’s State Pension age is set to be increased to 66 by October 2020.

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