On 13th January the Department of Business Innovation and Skills (BIS) confirmed that the DRA is to be phased out between 6th April 2011 and 1st October 2011.
Currently the DRA enables employers to make staff retire at 65 regardless of their circumstances, but the Government feels the rules must change as people are living longer, healthier lives.
The change means that:
Although the Government is removing the DRA, it will still be possible for individual employees to operate a compulsory retirement age, provided that they can objectively justify it.
BIS also announced that the government will introduce an exemption to the principle of equal treatment where death in service and income protection (permanent health insurance) are provided by an employer. The BIS commentary includes medical insurance in the exemption but it is our view that this needs to be clarified. This will permit these benefits to be withdrawn in line with State Pension Age (SPA), initially applying to employees age 65 and above and rising thereafter. The position of selfâinsured arrangements is currently unclear.
PMI Health Group welcomes this announcement at a time when employers and their employees will need to consider financial protection more than ever before in the face of proposed cuts to the Welfare State.
Further information
Contact your PMI Health Group Advisor.