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UK court rules default pension age is legal

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  • UK court rules default pension age is legal

UK - The UK High Court has ruled in favour of the government and confirmed the decision to adopt a default retirement age was "legitimate and proportionate", though it warned a review of the regulations next year should consider whether the use of an age 65 retirement date can be justified. 

In his judgement Justice Blake highlighted the difference between a designated retirement age and a mandatory one, and rejected claims from ageing charities that the rule is discriminatory and in breach of EC regulations.

He stated: "I do not consider that the decision to adopt a DRA was a disproportionate way of giving effect to the aim of social labour market confidence."

However, on the issue of adopting age 65 as the DRA, the judge admitted this question was "much more difficult than all the other issues in the case". He said while the government could not conceivably have adopted an age less than 65 "there were powerful reasons why an age over 65 should have been adopted by government".

Although he said the support for an age 70 was minimal during the consultation process, the judgement noted "the choice of 65 seems particularly odd in the light of subsequent thinking about pensionable age which is intended by the middle of the century to rise to 68".

Justice Blake admitted it was not the court's role to identify when a particular age for DRA is justified and following the government's announcement in July that it intends to bring forward a review of the default retirement age from 2011 to 2010 he ruled the age 65 is not "ultra vires the Directive and I do not declare it void". (See earlier IPE article: Retirement age review may cause DB admin headache)

That said, had Regulation 30 [the default retirement age] been adopted in 2009 instead of in 2006, "or there had been no indication of an imminent review",  then he would have concluded that the selection of age 65 as the DRA "would not have been proportionate". 

This would have been on the basis that it creates a greater discriminatory effect than necessary on people who are both able to and willing to work longer, while a higher age would not have a general detrimental effect on the labour market or block jobs for future generations. 

"If the selection of age 65 is not necessary it cannot therefore be justified. I would accordingly have granted relief requiring it to be reconsidered as a disproportionate measure and not capable of objective and reasonable justification," he stated. 

Justice Blake added the government's "timely review" of the issue must give "particular consideration to whether the retention of 65 can conceivably now be justified".

Andrew Harrop, head of public policy at Age Concern and help the Aged, the charities which pursued the legal case, called on the government to use the Equality Bill currently before Parliament to amend the legislation rather than waiting for the review in 2010.

Harrop said: "In his ruling the judge makes it clear that the only reason he has allowed the law to stand is because ministers have already caved in to our pressure for a review of the law. He makes it clear forced retirement at 65 is unsustainable. This judgement makes it crystal clear that this unfair legislation is past its sell by date."

Edward Wanambwa, partner at employment and partnership law firm CM Murray, added: "For employers there will be a huge sigh of relief as the status quo of retirement at age 65 will, at least for the time being, continue as before. But this is only a temporary reprieve. It may therefore result in the age being increased, say to 70, or possibly even being removed altogether."

A Department for Business spokesperson said:"The judgment makes clear that the Default Retirement Age is justified in the eyes of the Court. We will now go forward with our plans to review the DRA in 2010 - as we announced in ‘Building a Society for All Ages' - taking today's judgment into account in conducting the review."

The judgement follows research by law firm Eversheds which suggested 73% of employers want to keep a DRA of age 65 in place, mainly over concerns about workforce planning although 31% are worried about performance of over-65s. However, 8% admitted raising the DRA would be better than abolishing it altogether. 

Findings from the survey of 250 senior managers and HR professionals showed 24% usually accept requests for staff to work past 65, while 68% consider requests on an individual basis and just 8% usually decline applications. 

The European Court of Justice (ECJ) passed the case back to the UK in March as it said it was "ultimately" for the High Court to decide if the rules are in breach of the EC Directive. (See earlier IPE article: ECJ passes Heyday case back to UK High Court)

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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