Posted on Thursday 23 September 2010 by Ulster Business
By Wilfred Mitchell, FSB Policy ChairThe Federation of Small Businesses believes the government proposal to scrap the default retirement age in the UK is long overdue and, if implemented, could help inject substantial and much needed extra pounds into the economy. Research carried out by the Federation revealed that small business owners had absolutely no intention of putting a blanket policy in place to ensure their employees retire at 65. Indeed, those surveyed said they placed enormous value in older members of staff and greatly appreciated the huge contribution and range of skills, knowledge and wisdom these workers bring to their respective businesses. Nearly 80 per cent of those questioned said they do not enforce the default retirement age for their staff and 76 per cent believe that retirement should be a mutual decision between the employee and employer. Two thirds said they did not think the Government should set a default retirement age and 90 per cent of small businesses would consider an employee going into part time or flexible working, rather than retiring. For many people their work is a vitally important element of their life and enforcing retirement on them is not only unfair on the individual but also deprives the workplace of willing and capable employees. Furthermore, by retaining these valuable members of the workforce it will also help ease strain on already stretched public finances by ensuring more people continue to make vital tax payments. However, it is essential that a provision in the new law is also created to protect employers that need to retire staff because of ill health that threatens or hinders their levels of performance.
By Joanne Stuart, Chairman, Institute of Directors Northern Ireland DivisionThe Institute of Directors believes the abolition of the Default Retirement Age (DRA) would remove an important mechanism that gives employers flexibility in managing their workforce. We do not see how removing it is compatible with the Government’s stated desire to boost enterprise and de-regulate the employment arena. With more people wanting to work past 65 because they are living longer, healthier lives, we believe there needs to be a fuller examination of the UK’s existing retirement framework. While it is the case that many people will be capable of doing their jobs past 65 and into their 70s, it is important that the Government recognises that this will not be possible for all employees in all job types. In some instances it simply won’t be possible for employers to adapt jobs to suit older workers. And in small firms it may be completely impossible to redeploy older workers to suitable jobs. For these reasons, many employers will continue to need the flexibility provided by the DRA. However, in a highly competitive business environment no sensible employer wants to lose good staff just because they’ve reached a certain age. Equally, it is important that capable employees, who want to work longer, have the opportunity to do so. We think that the current system, where employees can work beyond the DRA with the agreement of their employers, is sound in principle, and supports both parties. But this does not mean that there is no scope for reform. We believe it’s important that the UK’s retirement system evolves in line with modern working practices and we therefore propose that the DRA is raised, initially to 68. Such a step would allow people to work longer, while ensuring that employers have options in dealing with their specific business needs.