Ageism costs economy £31 billion

11 January 2010

Forced retirement at 65 and other examples of "ageism" costs the UK economy £31 billion a year and must be outlawed, the minister for women and equality has today announced.

Speaking at a Help The Aged Conference, Harriet Harman confirmed the government’s review into state retirement age would be fast-tracked in a bid to banish ageism in the workplace.

"We still have to challenge the old-fashioned notion that defines you through your importance to the world of work, and that when you no longer work sees you as ‘past it’,” Harman says.

“We still have more to do to tackle the attitude that once you reach 60 you are just treading water until you become frail and dependent.”

Following recommendations made in the Turner Review nearly five years ago, the government pledged to review the default retirement age in 2010 to see if it was still needed.

"This is important not just for those individuals concerned but for the economy as a whole,” adds Harman. “We have to banish the ageism in the workplace that costs the economy up to £31 billion per year.”

The Equality Bill, which enters committee stage in the House of Lords today, aims to strengthen the law when it comes to older people. As well as scrapping forced retirement, the new legislation will ban age discrimination in the provision of goods and services – for example, travel insurance and loans.

The government is concerned about how the older generation can be financially supported in the future. Pensioners now outnumber school children, presenting a serious concern about the future of the state pension and other benefits, and how the government will fund these.

Jonathan Maude, employment partner at Hogan & Hartson, says Harman's comments signify the government's intention to "kick-off" its review.

But he points out that this could be redundant, depending on the outcome of the pending general election. 

There are 1.4 million people working past state pension age, according to the Office of National Statistics, up from 1.2 million people a year ago. The poor performance of pension funds is one reason many people aged 65 and over are going back to work.

What are your rights?

It is currently unlawful for employers to discriminate against their staff on the grounds of age, unless they can justify their actions. This means that pay and other benefits should be based on skills rather than age.

However, the law does give 65 as the default retirement age, and employers can refuse to hire candidates aged over 65.

If your employer does decide to retire you once you turn 65, then it must give you between six and 12 months' written notice.

Should you request to continue working beyond the compulsory retirement age, then your employer must consider this and provide a response - although it does not have to give reasons for its decision.

You do have the right to appeal its decision - however, employers retain the right to retire you as long as it follows the correct procedure.

Employers can only retire people below the age of 65 if they can show that having a lower retirement age is “appropriate and necessary”.

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