Scrap right to enforce retirement at 65, says Committee

29 June 2009

Employers should lose the entitlement to force employees to retire at 65, the House of Commons Work and Pensions Select Committee has argued.

A report from the Committee on the lack of adequate pensions provision, due to be published next month, is likely to recommend that workers aged 65 and over should be allowed to carry on in their jobs, either on a part-time or full-time basis.

According to the Committee, as long as they are fit and able to fulfil their duties, employees should have the right to continue in their jobs with full holiday and employment rights.

Many people on the verge of 65 have found that their pension funds are insufficient to secure a comfortable retirement yet have no right to continue working in order to make good the shortfall.

Terry Rooney MP, who is chair of the Committee, said that the current law, which enables employers to require staff to retire at 65, both discriminates against older workers and adds to the difficulties in which the pensions industry finds itself.

Mr Rooney commented: “There are an awful lot of people now reaching pension age who are finding that their pension pots are nothing like as big as they expected them to be. They get to a situation where the employer is able to sack them at 65 and no one else will take them on.”

Currently, employers can release an employee without redundancy payments on their 65th birthday. Although employees have a right to ask to work beyond 65, employers need only consider rather than accede to the request.

The Department for Work and Pensions has said that the default retirement age will not be reviewed until 2011.

Three years ago, the charity Age Concern contested the rules in the High Court on the basis that the regulations discriminate against older workers.

The test case was referred to the European Court of Justice, which judged that the UK’s compulsory retirement age of 65 did not contravene EU law provided the government could justify it. Later this year, the UK’s High Court will be asked to rule on whether the default retirement age is indeed justifiable and legitimate.

Michelle Mitchell, charity director of Age Concern and Help the Aged, claimed that seven out of ten companies have policies of compulsory retirement at 65.

She said: “The government should scrap a piece of legislation that is at odds with the needs of an ageing society and the economy.”