Employers must formalise their flexible retirement policies ahead of the abolition of the default retirement age or risk breaching age discrimination laws, JLT Benefit Solutions warns.

The consultant said client research revealed the majority of sponsors and schemes remain unprepared for the consequences of the DRA removal, set for April 2011.

JLT Benefit Solutions head of technical services John Wilson explained the number of people working over the age of 65 would create benefit headaches for bosses.

He said: "There is quite a lot of work to be done on the implications - both for retirement benefits and ancillary benefits such as life insurance and permanent health insurance."

Wilson said at present people who work over the age of 65, and do not take benefits, continue to receive those benefits unless their employer can ‘objectively justify' otherwise.

He said: "Just citing cost alone is not considered a sufficient defence, there would have to be something else. Employers need to decide now what they will and will not allow.

"For instance, will they allow employees to take some of their benefits if they remain in service? What will they be willing to provide? They then need to talk to their advisers about whether their proposed strategy is something there is compliant with age discrimination legislation or can be objectively justified."

Wilson added: "We have already seen cases of an increasing amount of flexible working, and there will be more legislation to facilitate that. The issue will become all that more acute when there is no mandatory retirement age."

He urged the government to issue more extensive guidance on how age discrimination interacts with employee benefits quickly.

Article from Professional pensions