CBI seeks clarity for retirement rules

The Government must urgently clarify its position on retirement rules and how it will respond to businesses' concerns before it scraps the Default Retirement Age (DRA) next April, the CBI said today.

The UK’s leading employers’ group has said that companies will face huge uncertainty and greater risk of tribunal claims if the Government does not tackle the unintended consequences of the decision.

The CBI is proposing solutions to five key problems that the change will create for employers. It is concerned about the consequences, not the principle, of not having a DRA.

The removal of the DRA will be one of the biggest changes to employment law in 2011; the rules around retirement will be less clear for employers and their staff, and the resulting process potentially less dignified and more complicated.

Despite announcing that the DRA will be phased out from April, the Government has not yet produced any guidance or draft regulations to clarify for employers or staff what the new legislative framework will look like.

In the absence of a replacement to the DRA, the CBI is calling for:

*the change to be delayed for a year

*retirement conversations to be protected

*the law on performance management and unfair dismissal to be made simpler and more balanced

*the Government to spell out how companies can use 'objective justification' to defend a retirement age

*the state pension age to be used as a milestone after which employers would no longer have to offer occupational benefits.

John Cridland, CBI Director-General Designate, said: "The ageing population and the shortfall in pension savings make it inevitable that people will want to continue working for longer. Employers understand this, and businesses value the skills, experience and loyalty that older workers bring.

"However, in certain jobs, especially physically-demanding ones, working beyond 65 is not going to be possible for everyone. The DRA has helped staff think about when it is right to retire, and has also enabled employers to plan more confidently for the future.

"With the scrapping of the DRA in April, a legislative void is opening up. We need to modernise our employment law framework to ensure that it is fit for purpose.

"In the majority of cases this will not be an issue, but in a minority it will be a serious problem for all concerned.

"The Government needs to act fast, and there should be no changes to the retirement framework until these issues are resolved."

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