Ruling on retirement is a bad one

Sep 29 2008 by Kevin Rowan, The Journal

LAST year a very warm welcome was given to a new set of legislation which sought to outlaw discrimination on the grounds of age.

While this law covered both young people and older people from unfair actions it was particularly welcomed by older workers who have been identified as the largest group of workers discriminated against in employment.

Employer groups and economic agencies welcomed the new regulations too, seeing this as an opportunity to maximise the talent that we have right across our labour market, a small region like ours cannot afford to miss out on experienced, knowledgeable and committed workers.

For older workers themselves, they saw this new set of duties as an opportunity for them to secure the best practicable income in the run up to retirement. So often older workers are expected to “slow down” or “wind down” toward exiting the workplace.

For some people this is exactly what they want, for many more, this is exactly what they don’t want. Older workers do not automatically want to cut their hours and very few seek to reduce their level of responsibility or income. In final salary pension schemes this can have a dramatic impact upon pension provision.

These dynamics contrast markedly with the advice from the Advocate General in the European Court of Justice this week, who has taken the view that it is, or should be, legal to force older workers to retire at a “normal retirement age”.

This is potentially a bad decision for a range of reasons. Firstly, it will undermine attempts to prevent discrimination against older workers. Employers, understandably, could look at older workers approaching their normal retirement age and take a conscious decision to overlook them for training or for a promotion opportunity – on the grounds that the individual would have to retire in a short while.

Secondly, the sad truth is that many older workers retire into relative poverty. Retirement might bring with it a good deal of free time, but for many much of that time will be spent juggling a very tight budget.

Those workers who do wish to work beyond their normal retirement age fall into two categories; those who want to carry on working because they really enjoy what they are doing, or those who simply can’t afford to retire. Until we’ve sorted out our whole pensions system properly to allow people to choose to retire with dignity, we shouldn’t force people who have so much to offer to leave the workplace against their will.