Default retirement age could be scrapped by October 2011

The government is proposing to scrap the default retirement age of 65 by October next year, it today confirmed.

A consultation document issued today proposes a six-month timetable - from April to October next year - to phase out existing DRA regulations.

Currently employers can make staff retire at 65 regardless of their circumstances but the government said this is set to change as people are living longer, healthier lives.

Pensions minister Steve Webb said: "Many older people want to work after age 65 and have a wealth of skills and experience that are not being used.

"We want to get rid of the default retirement age so that if they want to work they can do so. By spending longer in the workforce they can also have a better pension in retirement."

The government said the consultation will remove the administrative burden of statutory retirement procedures on employers.

It said with the DRA removed there is no reason to keep employees ‘right to request' working beyond retirement or for employers to give them a minimum of six months notice of retirement.

Employment relations minister Edward Davey said: "With more and more people wanting to extend their working lives we should not stop them just because they have reached a particular age. We want to give individuals greater choice and are moving swiftly to end discrimination of this kind."

However, the Confederation of British Industry said the government's timetable to scrap the DRA will give companies little time to prepare.

CBI deputy director-general John Cridland said: "Scrapping the DRA will leave a vacuum, and raise a large number of complex legal and employment questions, which the government has not yet addressed. This will create uncertainty among employers and staff, who do not know where they stand.

"A default retirement age helps staff think about when it is right to retire, and also enables employers to plan more confidently for the future. In certain jobs, especially physically demanding ones, working beyond 65 is not going to be possible for everyone."

Despite the proposals, the government said individual employers will still be able to operate a compulsory retirement age, provided that they can objectively justify it.

The government is taking other steps to help and encourage people to work for longer, including reviewing when the state pension age should increase to 66 and re-establishing the link between earnings and the basic state pension.

The consultation closes on 21 October.