Scrapping the DRA will create legal minefield

Watching the evergreen Ryan Giggs complete 90 minutes of Premier League football at the ripe 'old' age of 37 last weekend got me thinking about the ongoing problem UK employers and employees face when it comes to retirement.

For professional sportsmen this problem arises at a much earlier age than for most, although many will have earned enough in their short careers to having guaranteed their financial security many times over.

Unfortunately, for the rest of us, this is not the case. Advances in medicine and quality of life have meant that we are living much longer in retirement. The reason that defined benefit pension plans are all but extinct (unless you work in the public sector) is because they simply weren’t designed to pay out for the length of time that people are now living.

The result is massive pension deficits that have crippled many public and private sector companies and in the latter led to the almost universal adoption of defined contribution schemes.

This has shifted the burden to the employee, who is now having to pay in more money than ever before in order to guarantee his financial security in what is likely to be a lengthy retirement. The coalition’s decision to scrap the default retirement age (DRA) is an attempt to solve this problem by guaranteeing the right for an employee to continue working beyond 65.

However, in my opinion, it is a huge mistake. In scrapping the DRA the government has created a legal minefield for employers, who have been advised by ACAS that they can still make people retire as long as it can be shown that the decision was "objective".

Of greater concern, is the fact that employers may be accused of disability discrimination if they attempt to make an employee retire because common problems associated with aging, such as deteriorating sight and hearing, have impaired their ability to perform their duties.

Because this represents a major shift in employment law, there is no case history to turn to for guidance and logically it’s going to take a number of years for that to change. Sadly, this also means that in the interim a lot of companies are going to get sued.

Simon Nias is news editor of PrintWeek