Default retirement age: Why we should scrap it

Since the government’s close shave in the Heyday case, where it narrowly succeeded in defending the default retirement age (DRA), there has been growing pressure to review the current rules.

It was the Department for Work and Pensions which announced last year that the government would be bringing forward the review of the DRA to 2010, neatly demonstrating the need to address one of the most pressing problems for this generation – how to fund the pensions of the ageing population.

The call for evidence closed last week; individuals, business groups and campaigners have been submitting evidence on both sides of the argument. For every employer who extols the freedom of operating without the bureaucracy of using the retirement process, you’ll find others who fear the loss of control and what they see as the last opportunity to dismiss older underperformers and have control over succession planning.

But a fixed retirement age is fundamentally discriminatory; it is based on the assumption that age affects someone’s ability to do their job. Unlike other protected characteristics, age can be used arbitrarily to fairly dismiss people. Plus, policy makers agree that it is essential to increase the labour market participation of older workers to avoid a worsening of the dependency ratio, which would lead to a reduction in living standards for all. The UK must keep more workers in employment for longer.

No doubt the CBI will submit its research, which states that 81% of requests to remain working are being accepted. This is supported by the EFA’s own research. But we have also submitted the research we carried out with 200 HR professionals last summer. It found that almost two-thirds (64%) of employers who operate a mandatory retirement age agree that it can lead to a loss of valuable knowledge and talent.

Among those organisations that have removed the mandatory retirement age, more than three-quarters considered it a positive step for their organisation and said it helped maintain valuable skills and their organisation’s customer-facing image and reputation.

But what is happening to the people whose requests to stay on weren’t granted? And how many are not even getting to that stage because there is a strong culture that encourages people to retire? If they are being forced to retire against their will, there is nothing they can do about it.

In addition to the research, the EFA also carried out focus groups with employers, exploring the barriers to removing the DRA. The central concern continues to be lack of confidence in their own performance management systems. This is exacerbated by the ongoing belief that performance declines rapidly with age and people will want to work for ever, given the chance. Although there is little evidence to support these stereotypes, the image that there will be old people who can’t do the job, clogging up the corridors, is persistent.

Few employers have much confidence in their appraisal schemes. But the organisations that have removed a retirement age, including B&Q, Nationwide, JD Wetherspoon, Marks and Spencer and BT, have identified an improvement in the rigour and effectiveness of their performance management schemes as one of the biggest benefits. When you take away retirement, managers can no longer allow poor performers to coast.

The argument that retirement allows people to leave work with dignity is still used, and some employers seem to be clinging onto this paternalistic approach. However, none of the employers who operate without a retirement age have any evidence that there is a loss of dignity or that older workers are being forced to stay on when they are no longer capable. In reality, the majority of employees are very alert to their capabilities and most want to continue working for a relatively short time to fit in with other commitments they have.

A change to the rules on retirement is inevitable. The experience of organisations that have already successfully removed mandatory retirement ages means that employers shouldn’t be concerned. There are challenges, but the EFA is calling on the government to take the lead and ensure that the message is heard loud and clear: age is not an indication of capability, and 65 should be just another birthday.

Rachel Krys, campaign director, Employers Forum on Age

Personnel Today is campaigning with the EFA to Ditch the DRA