Removal of Default Retirement Age (DRA) (March 2011)
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Currently the DRA rules enable employers to make staff retire at 65 regardless of their circumstances, but the Government feels the rules should change as people are living longer, healthier lives. On 13 January the Department of Business Innovation and Skills (BIS) confirmed that the Default Retirement Age (DRA) is to be phased out between 6 April and 1 October 2011.

Impact on employment
  • From 6 April 2011, employers will not be able to issue any notifications for compulsory retirement using the DRA procedure
  • Between 6 April and 1 October, only people who were notified of retirement before 6 April, and whose retirement date is before 1 October can be compulsorily retired using the DRA.
  • After 1 October, employers will not be able to use the DRA to compulsorily retire employees.

Although the Government is removing the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it.

Impact on insured group risk benefits (income protection, death-in-service and health insurance)

BIS has also announced that the government will introduce an exemption to the principle of equal treatment where group risk insured benefits are provided by an employer. This will permit these benefits to be withdrawn in line with State Pension Age (SPA), initially applying to employees age 65 and above, and rising thereafter. The position of self-insured arrangements and other insured arrangements where the policy holder is not an employer e.g. barristers, is currently unclear at present.

The exemption means that
  • Employers will not need to modify their insured group risk arrangements assuming they already conform to the existing equal treatment (Age Discrimination) regulations.

We welcome the Government’s decision to grant an exemption to group risk benefits in providing essential financial protection to employees and their families.

Cartlidge Morland provides comprehensive, ‘whole of market’ advice to employers and can provide bespoke advice and recommendations on Group Risk Products such as Group Life, Group Incapacity and Medical/Dental cover for those organisations wishing to cover employees beyond State Pension Age.

Cartlidge Morland is an independent employee benefits consultancy. We provide benefit services to a wide range of partnerships, family companies, PLCs, charities and governmental organisations. We also provide financial advice to private clients, investment management and mortgage broking services

Phone us on 020 7709 5560 or complete the online contact form