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Retirement At 65 Not Anymore What Does This Mean To You
Estimated reading time: 2 minutes
The 1st of October is a key date for anyone who is approaching their 65th birthday. As per the legislation that went into force from the 1st of October, employers can no longer force people to retire just because they have reached the age of 65. The new rules do not allow employers to force what is popularly known as Default Retirement Age (DRA) and ask people to leave their jobs as they have attained the age of 65 years.
There rationale for this change is based on the fact that people are healthier now when compared to what it was a few decades ago, people are also living longer and arguably with lower arrangements for pension and hence helps people to be economically productive for longer periods of time.
The transitional period has been in place since April 6th 2011 and hence employers have had enough time to change to implement these changes. With the current change in place now, employers who wish to make people over the age of 65 redundant or force them to retire; they have to objectively satisfy the authorities that the person in question does not have the ability to satisfactorily carry out their duties.
The beneficiaries are obviously people who are in the early sixties and are willing to continue working. They now have the opportunity to carry on working without having to worry about the DRA. The campaigners for age equality and discrimination are equally pleased as their demand to disallow employers to discriminate based on age has been largely met.
However if you are in the early youth, this is not such a good news as this change in legislation will no doubt impact the number of new employment opportunities that are available. There are about half a million people who used to retire every year due to DRA and that meant new half a million opportunities. With an ageing population, the opportunities for the youth increased each year by default. However this means that new jobs may not come in at the same pace as it was and as such can have adverse impact on youth unemployment. There were some employers including the various government departments who heavily relied on people retiring to save costs, commonly referred to as natural wastage. With the change in DRA, the employers will have to resort to redundancies which can be more expensive to manage and implement.
Stuart Boseley, Director of Best Insurance welcomed the change and commented that while in the short term, repercussions such as higher youth unemployment cannot be ruled out, this change has far reaching benefits in the long term. More economically active people in any country can only be a good thing. He also added that there are lots of highly experienced people and sometimes the DRA was harsh and did not take into consideration the loss of skills and cost of re-training other members of staff.
Kesh Thukaram, Director of Best Insurance said that this change will indirectly fuel the demand for income protection insurance. Lower natural wastage means that the whole company or department will have to be out at the risk of redundancy and this will only increase the requirement for good income protection insurance. Research after research in the recent months has shown beyond doubt that income protection insurance is a must have policy as uncertainty for jobs is at an all-time high. The last thing one wants is to lose a job with no income protection as the consequences can be disastrous especially if one does not have sufficient savings in this inflation ridden economy.
Best Insurance specialises in short term income protection insurance and has a wide range of income protection insurance and payment protection insurance. The unemployment protection insurance and redundancy protection insurance can be extended to cover accident and sickness as well. Apart from online quote and buy facility for income protection insurance and payment protection insurance, Best also offer products over the phone and hence calling before making the final buy decision is never a bad idea.