It’s all change on pensions

On 6th April 2011 the Default Retirement Age (DRA) of 65 ceased to be law. The government has said that it is to reflect the change in economic circumstances since it was introduced. They claim it is a realisation of the fact that people are living longer and need to work longer to save for retirement. The government anticipates that consensual retirement will become the norm.

Farmers will have to show objective justification for dismissing a worker based on their age. This will entail identifying a legitimate aim being pursued and showing that the means used to pursue it are proportionate, i.e. it must correspond to a real business need, actually meet that need and go no further than necessary in meeting it. The farmer should be able to show that a variety of alternatives were considered.

The option for farmers is either to abandon the concept of a fixed retirement age altogether – they will need to show on a case by case basis the reason for the dismissal -and that it was not related to age discrimination. Alternatively, if a fixed retirement age is retained, justify it having weighed the discriminatory effect on the worker against the benefits achieved for the farm and considered whether the aim can be met be less discriminatory means.

Acas’ guidance booklet called “employer justified retirement age” (EJRA), points out that it may still be possible to retire a worker lawfully, even without the DRA. It provides examples in certain sectors where there is a need in some occupations requiring exceptional mental and/or physical fitness. Clearly where there is a significant degree of manual handling or physical strength required for a worker to undertake his duties on a farm, this may come within the realms of justification. The caveat is that this must be viewed on a case by case basis and not viewed as a generally accepted policy.

The test of objective justification is not an easy one to pass and it will be necessary to provide evidence if challenged; assertions alone will not be enough. Workforce planning should take place as part of a regular annual appraisal process. Otherwise, asking only older workers about their future plans could be seen as discriminatory.

The government is going to raise the state pension age to 66 by 2016 (and to 70 by 2040). It is therefore anticipated that the State pension age may become an important reference point in future on justified retirement ages, reflecting the state pensionable age.

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