HR experts and readers of The Manufacturer comment on plans to scrap the default retirement age.
Rachel Dineley, age discrimination expert, said:
“Some employers have already taken the plunge and operate successfully without a compulsory retirement age. For the rest there is a great deal for employers to consider, including such issues as the potential cost – for example, insurance benefits and redundancy compensation – for those working beyond 65, and performance management in respect of those who want to work on when they would otherwise have been graciously left to retire. Effective performance management, for all employees, lies at the heart of this issue. If the workforce is well managed, under-performance should be addressed at all levels, whatever the age of the individual in question.
“Other potential challenges for employers include reviewing redundancy schemes that may rely on employees retiring at 65 – for example, in determining the levels of redundancy pay, and managing disability issues and the duty to make reasonable adjustments – a duty which is more extensive under the Equality Act.”
Neil Bhan, pensions expert at Beachcroft said:
“We would expect most employers who sponsor defined benefit pension schemes to consider implementing formal flexible retirement provisions, if they haven’t already done so, in recognition of the change. At the very least they should review their current late retirement provisions to assess the actuarial/funding impact of a greater proportion of current active members wishing to retire later from the scheme as a consequence of working longer. Although the payment of employee and employer contributions for a longer period is likely to have a significantly beneficial effect for employers in relation to the ongoing funding requirement for defined benefit schemes, as will the concomitant shortening of the length of members’ retirement, this will be offset to the extent that any scheme rules effectively include flexible retirement or late retirement enhancements. Employers may also wish to consider implementing a later Normal Retirement Date under their schemes to reflect a trend towards a later contractual retirement age for employees.
“Ill health retirement will also require careful consideration by employers. Voluntary early retirement provisions in scheme rules are usually framed by reference to a Normal Retirement Date under the scheme – usually identical to contractual retirement date from service – so that the pension payable is often actuarially reduced as a result of being paid earlier that the scheme’s Normal Retirement Date. The actuarial/funding impact on the scheme of individuals taking such early retirement will be more significant in a scenario where later retirement generally becomes more prevalent. Similarly the funding impact of a member taking ill health early retirement will be relatively greater than if they had continued to a later retirement date from the scheme – although ill health retirement pensions are frequently unreduced for early payment. The significance of this issue would be reduced by implementing a later Normal Retirement Date under the scheme.”
John D. Sharples, Hartsdale Developments Ltd, said:
It seems to me to be a perfectly sensible change. At 65 a person should have the opportunity to decide if they wish to continue or alternatively to take up their pension rights and to leave. Conversely if an Employer does not wish to extend their employment then there should be a suitable clause in the employment agreement for a mutually acceptable parting of the ways to take place.
There is no doubt that there is now a shortage of skilled workers in manufacturing industries and the older Employees could be very helpful in training the younger generation who, probably through some serious short-sightedness in the education system over the past 20/30 years, have had reduced opportunities to acquire skills compared with younger generations in the past.
I am now 76 years of age and perfectly happy to keeping working, if only for a reduced number of daily hours.
Peter Lowe, Hadee Engineering, said:
Where are the jobs coming from? There are thousands going to stay in employment as many can’t afford to retire. The present education system is continuing to turn out under educated, high opinionated, lazy people – many of which will find it difficult to find any worthwhile employment – and if we are to believe it we are going to throw another four million long term sick, most of whom have never worked or wanted to.
What a mess! We need to concentrate on giving exporters tax breaks to encourage manufacturing and to create worthwhile jobs so that people aren’t just stacking supermarket shelves or burning burgers.
Jane Fiddian, The Curtain Girls Ltd, said:
As an employer, I have no problem with any employee who is capable of the work, working to whatever age they choose. We spend years honing their skills and the pension scrapheap is not the place for them. It is becoming less difficult to recruit new blood with the fashion for making / growing your own & recycling generally means that work looked down upon 10 years ago is regarded as a craft now.
As the boss, age 64 going on 30ish, I’m very glad I get to choose whether I work or not.
Renton Mein, Stevenson Reeves, said:
We have had a policy of allowing people to work past 65 since 1966. Our normal procedure is that when employees reach pensionable age (or become disabled), they claim their state pension (or disability allowances). Normally they reduce their working hours by agreement with the management to what suits both parties.
One employee even worked up to age 79 (started at 14), as he had a particular craft skill for which it was not worth training a replacement, as we only required it a few hours a week, and it so happened that it got metricated out of existence when he reached 79, so he retired and enjoyed a happy retirement for the next 20 years.
In the case of employees who become partially disabled or chronically ill, assistance can be obtained (from Disability Scotland, in our case) to keep them in employment in spite of reduced efficiency, if they wish to carry on working, and we have had one case like that, who worked reduced hours until he did retire at 65.
Provided the employee is still capable of doing their job efficiently, and is also willing to accept reduced hours and responsibilities where an appraisal indicates this would be appropriate, we feel that there are advantages to both parties in employees working past 65.