Default Retirement Age (DRA) to be phased out

Ministers have decided to proceed with their plan to phase out the DRA between 6 April and 1 October 2011. This is despite lobbying from business groups for more time to prepare for the change.

Subject to parliamentary approval, the last day employees can be compulsorily retired using the DRA will be 30 September 2011; and the last day to provide the 6 months' notice required by the statutory DRA procedures will be the 30 March 2011. Between 6 April and 1 October, only those who were properly notified before 6 April, and whose retirement date is before 1 October, can be compulsorily retired using the DRA.

Although the government is removing the DRA, it will remain possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it as a proportionate means of achieving a legitimate aim. 

To coincide with today’s announcement Acas has published a flowchart showing the transitional arrangements, and a guide Working without the Default Retirement Age. 

The change in the law will introduce an exception so that there are not unintended consequences for employers that currently voluntarily offer group risk insured benefits (income protection, life assurance, sickness and accident insurance, including private medical cover). There had been concern that removal of the DRA could lead to increased costs and uncertainty for businesses by in effect removing the cut-off point beyond which such benefits are currently no longer offered.

According to CIPD research over two-fifths (42 per cent) of individuals intend to work beyond the age of 65, with most (72 per cent) citing financial necessity as the main reason for staying on. A further 28 per cent of individuals say the offer of more flexible working arrangements by their employer would encourage them to work on beyond the current retirement age.

Download the Acas flowchart (PDF) here  

Download the Acas booklet (PDF) here