Retirement risks remain high


Update retirement policies to avoid age discrimination risks

Recent Irish research has found that although 67% of workers believe they will need to work beyond the age of 66, only 28% of workers actually want to work beyond the age of 66.

As working lives grow longer, employers that are unprepared to handle queries from employees around retirement or mandatory retirement ages may be exposing themselves to unnecessary legal risk.

Gap between contractual and state pension age

Retirement risks are accentuated by the rise in the state pension age. The age at which employees qualify for the state contributory pension will increase to 67 in 2021 and 68 by 2028. Many employers may have included a contractual retirement age that is lower than the state pension age.

This can raise a financial concern for employees who have included the state pension in their financial planning calculations for retirement.

Age discrimination claims up steeply

The recent research was published against the backdrop of the Workplace Relations Commission’s annual report for 2018 which set out details of a steep rise in discrimination complaints on the ground of age (up 343% on 2017).

The recent research and WRC annual report suggest that companies that include mandatory retirement ages in their employment contracts are particularly exposed to the risk of age-related discrimination claims.

If employers are to successfully defend any such claims, they must have objective justification for any specified mandatory retirement age.

Review retirement policies now

As the workforce grows older and the state pension age steadily increases in the near term, the likelihood of employees posing retirement-related queries increases. In the coming years, it will be vital to be prepared to deal with any queries that might arise around requests to extend employment beyond a mandatory retirement age, or on the other hand queries around early retirement.

Reduce the risks

The risk of offending the anti-discrimination provisions of employment equality laws is entirely avoidable. Employers can greatly reduce the risk of an age-related discrimination claim by ensuring that clear retirement policies and procedures are in place.

This written document should, among other things, outline how employees will be handled as they approach retirement and most importantly the objective justification for any mandatory retirement age which is stated.

Courts have accepted health & safety concerns, succession planning and intergenerational fairness as reasonable justifications for mandatory retirement ages. In the absence of statutory guidance, the onus is on employers to establish a reasonably objective justification for imposing a mandatory retirement age.

Got a query on retirement? Please contact the advice line on +353 1 886 0350 to speak with a consultant on this or any other HR issue affecting your organisation.
















Back to the blog
2020 Graphite HRM