Factfile: Mandatory retirement ages

We present a round-up of key facts relating to mandatory retirement ages.

1 The government is committed to legislation, to be effective by 1 October 2006, that will ensure that employees will no longer be forced to retire solely on the grounds of age.

2 Some British employers already actively recruit and retain staff beyond the organisation's normal retirement age. They still tend to set an upper age limit of 65 or 70, though exceptions are sometimes made. Their experience is that it leads to reduced turnover and associated recruitment and training costs, and lower rates of absenteeism.

3 The evidence on the effect of age on job performance is consistent with there being no deterioration in performance in most types of work, at least up to the age of 70.

4 Employers that have introduced flexible retirement schemes have generally done so in the context of performance monitoring systems. It is expected that such systems will need to be strengthened or introduced once mandatory retirement ages are abolished.

5 There is evidence that around one in 10 occupational pension scheme members retires at the scheme's normal pension age.

6 Fewer than one in 20 people who are not members of pension schemes retire only because they reach the normal retirement age in their job.

7 Only Australia, New Zealand and the USA (plus some Canadian provinces) have completely abolished mandatory retirement. This has been in place long enough in the USA alone to gauge its effect, and the evidence suggests that its abolition has had limited impact on the employment of older people there.

8 Employers in the USA have offered financial incentives, particularly by skewing pension benefits, to encourage older employees to leave.

9 The macroeconomic evidence suggests that the impact of restricting mandatory retirement is likely to be very small, but positive. Output is likely to rise, living standards to go up and the government's fiscal position to improve.

10 About 13% of men and 8% of women in the age band 65-69 are in paid employment, according to the Department for Work and Pensions Research Report 182 (see Factfile: working after state pension age ). Almost half of the men are self-employed.

Source: "Retirement ages in the UK: a review of the literature", by Pamela Meadows, Employment Relations Research Series 18, available from the Department of Trade and Industry's website (at www.dit.gov.uk/er/emar/errs18.pdf ), or from DTI Publications Orderline, Admail 528, London SW1W 8YT, tel: 0970 1502 500, free.