The Government will today confirm it will scrap the default retirement age from April 2011.
In July, the coalition announced it was consulting on plans to scrap the default retirement age from October this year.
Employers can currently force an employee to retire at age 65. Their only obligation is to hold a meeting with the staff member to discuss plans at least six months before their 65th birthday. The decision to terminate employment is then solely at the employer’s discretion.
Hargreaves Lansdown head of pensions research Tom McPhail (pictured) says: “This move will probably be unpopular with employers, however its impact on retirement planning may well be profound.
“For employees it means there is no fixed end date to which they should set their retirement expectations. The date on which they retire will be up to them and will not be dictated by someone else. Symbolically this is an important shift. It means their retirement is their responsibility, for better or worse and hopefully it will encourage them to plan ahead accordingly.
“For employers it means that they will no longer be able to dictate when their employees leave. The most effective way to ensure that someone retires is to make sure that they can afford to retire. In order to achieve this, it will be in employers’ best interests not only to pay money into employees’ pensions but also to encourage employees to take an active interest in their retirement savings. This is a healthy alignment of interests and the Government should be applauded for making it happen.”