UK plans to scrap fixed retirement at age 65

Thu Jul 29, 2010 5:55am EDT
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By Michael Holden

LONDON (Reuters) - Britain announced plans to scrap the fixed retirement age next year, saying it wanted to give people the chance to work beyond 65, but business leaders warned the move would create serious problems.

Currently, employers can force staff to retire at the age of 65 regardless of their circumstances and without having to pay any financial compensation.

Under the government's consultation proposals, the default retirement age (DRA) would begin to be phased out from April 2011 and come to an end by October next year.

Ministers said the move was designed to give people more choice as they enjoyed longer and healthier lives.

However, with Britain needing to cut public spending to address a record budget deficit, the move would see people paying tax for longer.

In January, Britain's Equality and Human Rights Commission argued that abolishing the DRA would inject 15 billion pounds ($23.43 billion) into the economy.

The proposals will also include a review of when the state pension age should be increased to 66 and to re-establish the link between earnings and the basic state pension.

"With more and more people wanting to extend their working lives we should not stop them just because they have reached a particular age," said Employment Relations Minister Edward Davey.   Continued...