Pensions: Prepare for a flexible retirement age

Removal of the default retirement age could be a double-edged sword for employers, who may have to rethink succession plans, but those with staff pension schemes may have less to worry about, writes Aegon's Rachel Vahey.

It is Rose’s first day back in the office after spending two scorching weeks in the Mallorcan sun. She sits at her desk rifling through her post and jotting down a list of ‘things to do’. Michael calls out to her: ‘Oh I forgot to mention that Aidan McLaren rang earlier, he wants you to ring him back about the Heyday case.’

‘Will do’, Rose replies. She pulls the ‘Age discrimination’ file off the shelves and quickly scans the contents, noting that while she was on holiday there were a few developments reported in the press and this was probably the trigger for Aidan’s call.

She dials Aidan’s number. ‘Aidan, it’s Rose, how are you?’

Aidan sounds surprised. ‘Hello Rose, I didn’t expect you to get back to me so quickly. Aren’t you just back from holiday?’

‘Yes, but it’s always a pleasure to speak to you. Michael said you wanted to talk about the Heyday case?’

‘That’s right. I read in the paper that the Heyday case was back in the courts recently. I understand the outcome of this may allow my employees to insist on working beyond the age of 65.’

Questions over retirement age

Rose replies: ‘I’m just going to put you on the speaker phone so I can look through my notes. But yes, you are quite right, the Heyday case was back in the courts. Age Concern claims it is age discrimination under EU law to allow employers such as yourself to force employees to retire at the age of 65.

'Previously the European Court of Justice decided this wasn’t contrary to EU law, but only if it can be justified in the context of UK employment policy and the way in which it’s achieved is not inappropriate.’

‘But I also read the government is going to remove the default retirement age of 65?’ asks Aidan.