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Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011

My Lords, the regulations before the Committee today fulfil the Government’s pledge to quickly phase out the default retirement age. They repeal the legislation which currently allows an employer to dismiss an employee—provided that certain administrative procedures are followed—solely for the reason that they have reached the age of 65. In order that employers who currently use the default retirement age have time to adjust, the repeals are subject to transitional arrangements. These arrangements allow retirements to proceed where individuals have been notified of retirement before 6 April and are 65 or above before 1 October this year. The regulations also introduce a new exception to age discrimination legislation for group insurance benefits provided by employers for their employees. This includes, for example, income protection, health cover and life assurance. We have provided an exception because the consultation on removing the default retirement age identified a real risk that group insurance benefits might be reduced or removed. These benefits are greatly valued by many employers and employees and can provide important social benefits, for example enabling cover to be provided to people who would otherwise find it difficult to obtain individual cover. It is in everyone’s interest to ensure that these employer-provided benefits are not withdrawn. The exception therefore makes it lawful to withdraw such benefits only for employees at age 65 or over. This minimum age for withdrawing insured benefits will increase in line with increases to state pension age. There is growing recognition that older people make an increasingly valuable contribution to the economy. This is without doubt a good thing. The over-50s currently make up just under a quarter of the workforce, but they will comprise nearly a third by 2020. Furthermore, latest figures from the Office for National Statistics show that the employment rate for over-65s has increased from 7.9 per cent to 9.1 per cent in the last year. Clearly, older workers will play a key part in the economic recovery and in the United Kingdom’s future economic growth. With increasing longevity, demographic change and skills shortages, it is crucial that we make full use of all available skills and experience, regardless of age, and we encourage older people to carry on working. It would be a shameful waste to ignore the contribution and potential of older workers. I hope that what I have said so far has struck a chord with Members of this House. We all know that age is not an indication of whether someone is able to do their job well. Research shows that productivity does not decrease with age in the vast majority of jobs, and that older and younger workers complement each other. Furthermore, it is wrong to suggest that increased employment of older people means unemployment for younger people. International studies show that, if anything, a higher employment rate for older people tends to increase the rate for younger people. Extending working life will also play an important part in reducing pensioner poverty and ensuring people are able to fulfil their expectations of retirement. A single man with a good employment history who decides to work one year beyond state pension age can increase his retirement income by up to 10 per cent. Many employers, meanwhile, are recognising the importance of retaining the valuable skills and experience of older workers to help them through, and out of, the recession. Research shows that older workers can bring such qualities as commitment, punctuality and accuracy to their roles, as well as having a more responsible attitude to health and safety. These attributes are valued by employers across the board. Some employers have asked how they might manage their workforce if they cannot retire people without inviting claims of unfair dismissal on age grounds. There is concern about long-serving but underperforming employees in their 60s; my response here is that employers should manage poor performance consistently across the workforce. To do otherwise is harmful to productivity and unfair on other employees. Another area of concern surrounds retirement plans; with the default retirement age procedures no longer in place—so the argument runs—employers will be worried about raising the topic of an employee’s retirement plans. There have been calls for such conversations to be legally protected in some way. Again, this is not necessary. For those businesses that do not operate with set retirement ages, ACAS has published helpful guidance explaining how to handle the retirement of their staff. It is perfectly possible for employers to have open and honest discussions with staff, as we set out in the recently published employers’ charter, while avoiding claims of age discrimination. Open dialogue can bring wider benefits, including discussing possible changes of role, work patterns or mentoring arrangements. A clear majority of businesses —two-thirds—already operate successfully without fixed retirement ages. Others will need to adapt. That is why we have provided guidance and best practice case studies on how businesses that currently use the default retirement age can manage without it. In summary, abolishing the default retirement age will ensure that older people have greater choice and opportunity to work up to the age of 65 and beyond. In turn, this will boost the UK’s labour supply and contribute to economic growth. Older people bring a wealth of talent and experience to the United Kingdom’s labour market. For these reasons, I commend the regulations to the Committee. I beg to move.