Government to scrap fixed retirement age

The government is to announce plans which will stop employers being able to force employees to retire at age 65. 

The proposals aim to phase out the fixed retirement age of 65 from April 2011. At present, employers can force workers to retire once they reach 65, without compensation, regardless of their ability to continue to work. This leads to the slightly farcical situation whereby an employer can apparently deem an employee able to do their job the day before they are 65, yet unable to so a day later.

According to the Times around 100,000 people were forced to retire in this way during last year alone.

While business are claiming that scrapping the compulsory retirement age will hinder business planning it has been largely welcomed.

Setting aside the logistics of implementing such a change I personally think the proposed changes are a good thing. They give employees greater flexibility and may help those who would otherwise be forced to retire into poverty. If you add into the equation the fact that the UK has an ageing population with a dwindling working population surely anything which helps spread the taxation burden is a good thing?

Interestingly if an increasing number of people work past 65 then will the government still allow them to not pay National Insurance Contributions on their earnings?

Perhaps the proposed changes are less about employee rights and more about money and the public finances? If the proposals become law the government should be able to generate more tax revenue from an ageing population. But not only that, the cynic in me also thinks that if the general ethos eventually becomes that the age of 65 is no longer significant in  terms of retirement then there will be less uproar when the government eventually ramps up the state retirement age even quicker than currently expected – in order to cut welfare costs.

Read more about the proposed changes here.