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Business calls to delay changes to retirement age

Business leaders today urged the Government to delay planned changes to the retirement age, warning that firms faced "huge uncertainty" and greater risk of tribunal claims if they went ahead.

The CBI said scrapping the so-called default retirement age (DRA) from next April would create "unintended consequences", pleading for more "legal clarity".

From next year, employers will not be allowed to dismiss staff because they reach the age of 65, but the CBI said the rules around retirement would become less clear for employers and their staff.

John Cridland, the CBI's director-general designate, said: "The ageing population and the shortfall in pension savings make it inevitable that people will want to continue working for longer. Employers understand this, and businesses value the skills, experience and loyalty that older workers bring.

"However, in certain jobs, especially physically-demanding ones, working beyond 65 is not going to be possible for everyone. The DRA has helped staff think about when it is right to retire, and has also enabled employers to plan more confidently for the future.

"With the scrapping of the DRA in April, a legislative void is opening up. We need to modernise our employment law framework to ensure that it is fit for purpose.

"In the majority of cases this will not be an issue, but in a minority it will be a serious problem for all concerned.

"The Government needs to act fast, and there should be no changes to the retirement framework until these issues are resolved."

The CBI called for the planned change to be delayed for a year and for the law on unfair dismissal to be made simpler.

The business group added that the state pension age should be used as a "milestone" after which employers would no longer have to offer occupational benefits.

TUC General Secretary Brendan Barber said: "Scrapping the default retirement age is a welcome move by the government. It cannot be right that workers lose their protection against arbitrary dismissal overnight upon reaching 65.

"There does need to be clear guidance for employers and workers to raise awareness of the new protection from unfair dismissal and age discrimination that older workers will have. We understand that Acas is in the process of producing such guidance.

"Not everyone wants to work longer but they want some choice over when they go, and to make that a genuine choice we need to ensure they have decent pensions to retire on."

A Department for Business spokesman said: "We are committed to helping and supporting employers adapt to the change in regulations and will be providing them with guidance, but we should not stop people from working just because they have reached a particular age.

"Our consultation asked what kinds of support are required and we will be publishing our response shortly, but many of the 500 respondents strongly support the plan that we have set out.

"It is important to remember that the vast majority of employers already choose to operate without fixed retirement ages, and many of those employers with retirement ages already offer flexibility to work longer."