Legislation that comes into effect on Monday will allow employees to tell the companies they work for they don’t want to retire before reaching their 66th birthday and the State pension.
Why the change?
Many employers have traditionally required their employees to retire when they reach 65, but those employees only become eligible for the State pension a year later when they turn 66, leaving thousands of people to claim social protection payments for a year.
At the same time people are ageing better, staying fitter and healthier into later life and so more able to work, which many of them want to do for social or other reasons.
Some people are having children or taking out mortgages later in life as the nature of relationships changes, while others are having to rent into old age because of the housing crisis.
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For all of these reasons, a substantial number of people were unhappy about being made to retire at 65, especially if their pension provision was poor. Although some would stay on with the blessing of employers and others would successfully argue their case under existing legislation, many simply went, often reluctantly.
What’s the change?
Under the new legislation – the Employment (Contractual Retirement Ages) Bill – most employees whose retirement, as specified in their contract of employment, is below 66, will be able to tell their employer they do not want to leave on the scheduled date.
If their employers want to persist in forcing them to retire, they must be able to justify the move, on objective grounds, in relation to the specific individual.
The employee must inform the employer of their desire to stay on at least three months before they are due to go, and no more than a year in advance. That three-month rule means the first people to benefit from the new law will not do so until September, with people due to retire before that potentially losing out.
So everyone has to work an extra year?
No. Nobody will be compelled to work an extra year. There is no obligation to stay until you are 66; you simply have a right to decline to go. That decision, it is expected, will be either agreed to by the employer in the majority of cases or could be upheld by the Workplace Relations Commission if a refusal is appealed.
Employers will be able to argue it is appropriate to keep to the original contractual age on a number of grounds, but they will have to set them out in writing on a case-by-case basis and there will be mechanisms for challenging the decision.
How many people will be impacted?
It is hard to know what take-up will be like, but about 4,500 people each year claim the benefit payment for 65-year-olds – the social protection payment that bridges the gap between retirement and State pension for many at present – while others take up new jobs. Some people seem certain to avail of the opportunity to continue to work where they are.
The most recent CSO figures show 133,000 people over 65 are already in employment, up from 32,200 just 25 years ago.
Many employees, particularly in the public service and the Civil Service, will not be impacted by this change as they have been allowed to work until 70 since 2018. Others, like gardaí and firefighters, for whom the statutory retirement age is 62, will not see any change on foot of this legislation.
What will employers do?
Many are simply changing their mandatory retirement to 66 to fit in with the new rules, according to Ibec. Others are rewriting retirement policies and procedures to take account of each employee’s right to stay on.
Some may have to deal with pensions or insurance issues linked to any changes.
All employees who do stay on will then be able to seek to further extend their working lives past 66 – but these cases will be dealt with under the old rules, by arguing retiring them on the basis of age is discriminatory or simply seeking an agreement, sometimes facilitated by a fixed-term contract.
[ ‘I need to keep working’: The people aiming to stay employed until at least 66Opens in new window ]
