The Chancellor’s commitment to a formal consultation on reforms to the Default Retirement Age will cause employers to review how they implement their pensions provision, according to Carol Dempsey reward partner at PricewaterhouseCoopers.
Dempsey says: “The cost of providing pensions is growing and the main ways to avoid a burden of future taxpayers include: lower benefits; higher personal savings; higher individual pensions contributions and, as the government has recognised today, retiring later. We support this flexibility but employers will have to give careful consideration to managing different generations in the workplace and they will need to reassess the role that a traditional pension scheme plays in the overall employment deal.”
Senior partner of law practice Barnett Waddingham, Adrian Waddingham, says: “Such a move has been expected, and if we are asking employees to share the dividend of improving longevity between work and retirement, a good and timely move. There is also a good chance that this will provide a new impetus for employers to provide good pension schemes, in as much as they will now have a good business case to ensure that their employees can afford to retire at a reasonable age.”
John Ball, head of defined benefit pension consulting at Towers Watson, says the move was an inevitability: “The number of people in their late 60s is expected to rise by more than 600,000 in the space of five years because the post-war baby boomers are just starting to turn 65. The state of the public finances means that politicians cannot solve their pension woes by giving them more money.
“Making it easier for them to continue working therefore appears inevitable, though it’s not yet clear if this will be through the ‘massive public policy change’ that ministers were talking about earlier this year.
While Rachel Krys, campaign director of leading age campaigners, the Employers Forum on Age (EFA), says the scrapping of the compulsory default retirement age is long overdue: “It’s been a long time coming. The Employer’s Forum on Age (EFA) has been campaigning against the forced retirement of workers for many years because it is fundamentally discriminatory.
“It is based on the assumption that age affects someone’s ability to do their job, and unlike other characteristics like race or gender, age can be used arbitrarily to fire people. The time has come to take age discrimination as seriously as race or sex discrimination.”
Article from Recruiter.co.uk