Age and decay

The government is going to review compulsory retirement ages in 2010 after the ‘Heyday’ decision.  Until then, it is not age discrimination to make someone retire at 65.    Meanwhile, there is speculation that the state pension retirement age is going to move to 67.

The government has a number of options:  to remove the limit completely, to substitute an older limit, or keep things as they are.  It seems unlikely they will keep things as they are since this will tip workers into claiming social security (if they don’t have enough pension provision) at an earlier age. 

Many employers are closing final salary pension schemes to new entrants – some even completely.  Pensions are part of pay, so great care needs to be taken not to accidentally constructively dismiss the workforce when doing this.

A unilateral reduction in pay (or status) can trigger a constructive dismissal claim if the employee resigns in protest.

Final salary pension schemes had a great disadvantage for flexible working, since, depending on the rules, spending the final few years working part time or at a lower paid job could really damage pension prospects.

Money purchase schemes, whilst suffering the disadvantage of fluctuating values, do have the advantage that higher contributions at an earlier date are unaffected by any later reductions.

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.   Tel: 08452 303050  Fax: 08452 303060  Website :  You can follow Annabel on twitter – and check our regular articles and news throughout the autumn on our blog site –

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