Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Legal Q and A

by Personnel Today 14 Jan 2003
by Personnel Today 14 Jan 2003

Legal Q and A by KLegal

Q In the recently published Pensions Green Paper, Simplicity, Security
and Choice, the Government has suggested abolition of compulsory retirement.
Will employers now be forced to keep on workers beyond the age of 65?

A These proposals, which are likely to become law in December 2006,
are the Government’s reaction to the UK’s ageing population and an EU directive
to stop age discrimination.

Once in force, employers will not be able to discriminate on the grounds of
age. Staff will then be able to continue working after 65 unless compulsory
retirement can be objectively justified. Unfair dismissal rights will apply to
all employees.

By 2010, early retirement will not be permitted before age 55 (the current
minimum age is 50). A simplified tax regime will mean the maximum early
retirement pension will be restricted to around £49,000 per year.

No changes are proposed to state pension ages although those still working
will be encouraged to defer taking their pension until they retire.

Q Keeping on employees over the age of 65 will be new territory for my
company. What are the key issues, particularly with respect to performance, so
we can manage them fairly and will not be open to claims of discrimination?

A Employers will need to adopt age-neutral performance management and
appraisal systems and adhere to them to objectively justify their treatment of
older workers. In addition, employers will need to review pay structures,
non-pay benefits, redundancy rules and recruitment policies. Indeed, ageist
jokes could amount to harassment.

Q One of the main headaches in providing a pension is the complicated
system of taxation. How does the Government intend to simplify the system?

A The Government is rightly concerned about the number of employers
terminating their occupational pension schemes and wants to make administration
of these schemes easier. Currently, there are eight different tax regimes
depending on the type of scheme and the date of joining. By 2004, a single,
simplified regime will apply to all tax-approved pension schemes and will
impose an individual lifetime funding limit on all tax-approved retirement
savings of £1.4m, of which up to 25 per cent may be taken as a tax-free lump
sum from age 55. Where savings exceed the lifetime limit, the excess will be
subject to tax at 33 per cent. Current limits on contributions will also be
replaced with a £200,000 annual limit.

Transitional rules will apply so that retirement benefits accrued before the
new tax rules are introduced will be respected. However, the value of these
benefits may restrict the ability to save towards further pension benefits in a
tax-efficient manner.

The Government has also announced that it wants to work with the insurance
industry to develop more flexible annuities including value-protected annuities
that allow unused capital to pass on to dependents where the pensioner dies
before the age of 75.

Q Is it true employees will be able to draw a pension while continuing to
work?

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

A Yes. Employees may start to receive their pensions after age 55,
while continuing in employment. This is already the position for personal
pension plans, and the the existing rules governing occupational pension
schemes will be relaxed. The intention is to encourage employees to keep
working.

Compiled by Duncan Buchanan, Partner, KLegal People Services

Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

previous post
Unpaid overtime is a global problem
next post
Stress standards to put pressure on employers

You may also like

Dallas Cowboy Cheerleaders receive 400% pay rise

4 Jul 2025

FCA to extend misconduct rules beyond banks

2 Jul 2025

‘Decisive action’ needed to boost workers’ pensions

2 Jul 2025

Business leaders’ drop in confidence impacts headcount

2 Jul 2025

Why we need to rethink soft skills in...

1 Jul 2025

Five misconceptions about hiring refugees

20 Jun 2025

Forward features list 2025 – submitting content to...

23 Nov 2024

Features list 2021 – submitting content to Personnel...

1 Sep 2020

Large firms have no plans to bring all...

26 Aug 2020

A typical work-from-home lunch: crisps

24 Aug 2020

  • Empower and engage for the future: A revolution in talent development (webinar) WEBINAR | As organisations strive...Read more
  • Empowering working parents and productivity during the summer holidays SPONSORED | Businesses play a...Read more
  • AI is here. Your workforce should be ready. SPONSORED | From content creation...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+