Add in that the default retirement age will be abolished this Autumn and you have a potentially crippling bill for some employers who are not prepared for the changes.
An employment survey has found that, of the businesses currently offering death in service benefits or private health cover, some 57 per cent did not realise that the cost of providing these would probably soar for those employees aged over 65. And 54 per cent said they would no longer honour those staff benefits if costs rose, leaving staff reaching 65 having to accept potentially worse pay and conditions in order to stay in work.
And a report out earlier this week, written by Lord McFall of Alcluith, the former chairman of the Treasury select committee, said that millions of people face a “bleak old age” when they retire, due to a low level of savings and the “complex, costly and inefficient” pensions system.
Business experts have been so concerned about this that they have already urged the Government to delay the planned changes, warning that firms face “huge uncertainty” and a greater risk of unfair dismissal claims.
However, the law stands that, as of October 1st, requiring an employee to retire because of their age will potentially be both unfair dismissal and age discrimination. Employers can safeguard their position by maintaining a compulsory retirement age for all employees and by being ready to defend this as ‘objectively justified’ in an Employment Tribunal.
A number of other bodies, such as unions and the Chartered Institute of Personnel and Development (CIPD) welcomed the change however.
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