How is HR reacting to the abolition of the default retirement age?
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The abolition of the default retirement age (DRA) is likely to have implications for the vast majority of employers, XpertHR's Charlotte Wolff writes: |
"The DRA and the associated statutory retirement procedure were repealed by the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 on 6 April 2011. Compulsory retirement dismissals effected after that date may amount to direct age discrimination or unfair dismissal, unless the employer can prove that the use of a compulsory retirement age is objectively justified as a proportionate means of achieving a legitimate aim."
Subscribers to XpertHR Benchmarking can drill down into the complete benchmarking data from the 2011 XpertHR Benchmarking survey on the impact of the abolition of the DRA. The survey is based on responses from 157 organisations with a combined workforce of 284,540 employees.
Most employers concerned over DRA removal
Seven organisations in 10 surveyed by XpertHR are concerned or very concerned about the impact of the abolition of the DRA. Such concerns are significantly more prevalent in the public sector than in the private sector.
Across the whole economy, the most common concern regarding DRA removal is the possibility of a spike in exits relating to capability and performance.
How are employers responding to the removal of the DRA?
The vast majority (more than four-fifths) of employers believe that the removal of the DRA will have an impact on their organisation's retirement policy. This figure rises sharply in the public sector.
Prior to April 2011, three-fifths of employers operated a retirement policy with a defined retirement age, but took a flexible approach to retirement. A further one in three adhered to the DRA of 65, while the remainder had no set retirement age in place.
So what action are employers taking in response to the removal of the DRA?
Responses include the following:
- Just over half of employers have decided that they will make no reference to a retirement age in employment policies or contracts.
- Two-thirds of organisations will allow employees to retire whenever they wish.
- One employer in four took action to retire one or more employees who would previously have been allowed to continue working during the transitional period to DRA abolition. At the median, 0.8% of the workforce were retired in this manner per organisation.
- Only one respondent out of 157 has adopted an employer-justified DRA.
Changes to other policy areas
The removal of the DRA also has implications for other policy areas beyond those directly concerned with retirement. Two-fifths of employers have made policy changes affecting areas other than retirement. These are most commonly focused on: performance management processes; pensions and benefits; and succession planning.
However, a further two-fifths have not made any policy changes to help counteract the absence of the DRA.
Communicating about retirement
How are employers communicating about the impact of the removal of the DRA to employees?
One organisation in three plans to introduce line manager training for communicating with employees about retirement plans. Fewer than one in 25 have such training in place at present.
The public sector leads on communication about retirement. When compared with the private sector, public sector organisations are:
- twice as likely to have arrangements for workplace discussions with line managers in place;
- nearly four times as likely to offer pre-retirement courses for older employees; and
- significantly more likely to operate or to be planning to introduce group talks on retirement planning.
You can also access XpertHR's detailed written analyses of the survey
findings, looking at employer responses; HR concerns; and the wider implications.
Michael Carty, benchmarking editor
