End of the Default Retirement Age
The Government has today confirmed that it will remove the Default Retirement Age (DRA).
This move will give people in work more choices about when they choose to retire.
Under current rules, employers can make staff retire when they reach their 65th birthday, regardless of their circumstances, ability to keep working or contribution they are able to make to the business.
The Default Retirement Age will now be phased out between 6th April 2011 and 1st October 2011. Employers need to give staff a notice period of at least six months when using the Default Retirement Age to force retirement, so no new retirement notices can be issued from the start of April.
This change is being introduced because people are living longer, healthier lives. Forcing people to retire at age 65 is often causing financial difficulties where people are relying on the ability to keep working in older age to supplement other sources of retirement income, such as the State Pension.
Just because employers will not be able to force retirement at age 65, those approaching their 65th birthdays should not become complacent about the ability to continue working in older age.
The plan to simply keep working is often a poor retirement plan. Health problems and energy levels can prevent people from working full time as they get older. Work can also become less available as people get older, with some types of more physical work becoming non-viable.
There is nothing wrong with the intention to continue working in older age, but this needs to be supported by plans for a secure retirement income should you be unable to work or the work you want to do becomes unavailable.
This move to abolish the Default Retirement Age is generally positive and should be applauded.
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