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Does the retirement age meet economic and social needs?

 

The European Court of Justice upholds default retirement age – but how long can it last?

Many employers want to retain the ability to retire employees at 65, but this may be inconsistent with the economic needs of society as a whole.

The European Court of Justice (ECJ) has ruled that Britain is justified in having a default retirement age of 65 because the rule does not breach European Law.

The verdict in Luxembourg appears to be a defeat for many, but the final decision still rests with the UK High Court, which will now have to decide whether the aims of the Government's 65 retirement age are "legitimate".

There are around 260 legal actions pending in tribunals, while thousands more pensioners who were forced to retire against their will have compensation claims waiting to see if the High Court's final ruling decides the compulsory retirement age is not justified.

The ECJ said the government must prove to a high standard why forced retirement ages are needed and those reasons must be based on social or labour market needs, not the interests of employers.

Many individuals believe that mandatory retirement ages should become a thing of the past as challenging financial circumstances make it even more important for older workers to be able to choose to work for longer if they want to.

Many Charities called on the Government to scrap the default age, saying ministers were sending mixed messages to older workers by encouraging people to work beyond the age of 65, yet keeping legislation that prevents many from doing so. According to one charity, one in eight MPs would be out of a job immediately if they were subjected to the same rules faced by millions of older workers. If a mandatory retirement age of 65 was enforced in Parliament, Margaret Beckett, aged 66, Housing Minister, and Kenneth Clarke, aged 68, the Shadow Business Secretary, would be among 89 MPs who would be forced to retire.

Many companies are challenging the Government’s retirement age by removing mandatory retirement. In these cases organisations have seen increased productivity, higher sales and a drop in absenteeism. A benefit of employing older workers is that people come with a greater life experience and a true willingness to work, meaning employees can pass on knowledge and skills to customers and younger staff members.

According to the Office for National Statistics 23% of the total UK population will be aged 65 and over by 2032.