Pipe and Slippers Anyone?

Retirement and the state pension age are increasingly topical subjects.   Although I still have a good few years’ hard work left in me it does seem if recent indications prove accurate my retirement is going to be further ahead than I had originally thought.

George Osborne, the Shadow Chancellor of the Exchequer, has just announced that, under a Tory Government, we are likely to see the State Pension Age (SPA) increase from 65 to 66 in 2016, a decade earlier than previously planned.  The SPA for women is already scheduled to rise from 60 to 63 in 2016. In addition, the age at which employment normally ends by way of retirement, the Default Retirement Age (not a phrase which readily trips off the tongue) is also likely to rise following the long-awaited outcome of the recent Heyday Case.

An increase in the UK retirement age is inevitable, no matter which political party is successful in the forthcoming election.   Since 1 October 2006, the Employment Equity (Age) Regulations 2006 (EEAR) have been effective and seek to transpose into UK law some parts of the Equal Treatment Framework Directive 2007/78/EC which prohibits direct and indirect discrimination on the grounds of age.  In particular, Regulation 30 set the Default Retirement Age (DRA) for the UK at 65.  That number was not plucked out of thin air - it was decided upon after pre-Regulation consultations as well as actual UK and some EU past practice.  The result was that, although employers with employees approaching 65 had to go through a notification process and offer the opportunity to request to work beyond 65, dismissal of an employee aged 65 or over was lawful where the reason for the dismissal was retirement and the correct process was followed by the employer.

On 3 July 2006, the Heyday Group (now part of Age UK) asked for a Judicial Review of the decision to fix the DRA at 65, maintaining that this was too low.  The case had been to the European Court of Justice and back to our High Court for determination. 

The recent outcome of the case is that the UK’s DRA of 65 is lawful.  But - and this is a big but - this decision was only reached by the Court because the Government had already decided to bring the review of the retirement provisions forward from 2011 to 2010.  

The upshot is that a DRA of 65 is currently lawful providing the correct procedure is followed by employers, but it is likely to be increased in 2010.  We can expect a DRA of 67 or 68 given the change in economic circumstances since 2006, when 65 was adopted.  Employers are concerned by what they see as an inevitable increase in costs and time brought about by additional performance management which they see as a likely consequence of an increased DRA.
 For those of you old enough to remember Logan’s Run (1976 TV Sci Fi) these developments are a long way removed from their ‘retirement’ arrangements when you went on the carousel at the DRA of thirty!

If you need any help any employment law issues, contact Raworths, telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate HG1 1HF. Alternatively you can email deborah.boylan@raworths.co.uk, ruth.williams@raworths.co.uk or kerry.waters@raworths.co.uk