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Sloan Center News

Should UK employers drop retirement ages?

4 March 2010—In the UK, a campaign to abolish the default retirement age of 65 is currently under way and a government review the issue will be reporting this year. The campaign has steadily become increasingly vocal, with Equality Minister and Deputy Labour Leader Harriet Harman recently commenting that there are already 1.3 million working people over the state pension age and that they are the fastest growing group in the labour market. "We have to understand that we now have a new cohort of well, active, healthy older people. We must recognise the emergence of the 'wellderly'," Harman said last month in an interview with the BBC.

Interestingly, the UK government's proposal for eliminating the default retirement age comes just months after a UK high court ruling found that employers can indeed force workers to retire at the age of 65. “Under the Employment Equality (Age) Regulation, an employer could force an employee to retire or refuse to employ them beyond that age without giving a reason. Employers can also refuse to take on anyone above the age of 65,” according to the BBC.

In an editorial compiled by the Financial Times' Stefan Stern, Center Director Marcie Pitt-Catsouphes responds to the following questions:

What are the hazards and benefits of abandoning the traditional fixed retirement age? Would companies be wise to take action on this now rather than waiting for legislation to come in?

"An end to mandated retirement would enable older adults to gain more control over the timing and the process of retirement, which (in turn) could contribute to the quality of their lives. But what might the consequences be for employers? Although it might seem counter intuitive, the elimination of mandated retirement could have positive consequences for managers, as well. Rather than assuming that older workers are just “pacing time” until the expected retirement occurs, managers might shift their focus to finding ways to enhance older workers’ engagement and ultimately their productivity. Forward thinking managers might also start to experiment with new paths to retirement (e.g., phased retirement) that allow businesses to better utilize the experiential capital of older workers.

"There are many positive consequences that could result from an end to mandated retirement."

» Read more at the Financial Times