October 2006 Legislation Changes
Posted On: 16/12/2005
Posted By: Employer
I understand legislation is due to change with regard to Ageism in October 2006. Could you please detail what these legislation changes are and also help me identify my responsibilites as an employer? Many thanks.

Answered by Andrew on 03/01/2006
TEN KEY POINTS

1. Age Regulations are due to come into force 1 October 2006.

2. Regulations cover employment and vocational training. This includes access to help and guidance, recruitment, promotion, development, termination, perks and pay.

3. The regulations cover people of all ages, both old and young.

4. All employers, providers of vocational training, trade unions, professional associations, employer organizations and trustees, and managers of occupational pension schemes will have new obligations to consider.

5. Goods, facilities and services are not included in these regulations.

6. Upper age limits for unfair dismissal and redundancy will be removed.

7. A national default retirement age of 65 will be introduced making compulsory retirement below age 65 unlawful (unless objectively justified). This will be reviewed in 2011.

8. All employees will have the ‘right to request’ to work beyond the default retirement age of 65 or any other retirement age set by the company and all employers will have a ‘duty to consider’ requests from employees to work beyond 65.

9. Occupational pensions are covered by the regulations, as are employer contributions to personal pensions. However, the regulations generally allow pension schemes to work as they do now. See regulations for more details.

10. The regulations do not affect state pensions.


Age regulations are awaiting parliamentary clearance early in 2006.

ANSWERS TO TEN QUESTIONS

1. Who does the law cover?

• All workers including self employed, contract workers, office holders, the police and members of trade organisations.
• People who apply for work and, in some instances, people who have left work.
• People taking part in or applying for employment related vocational training including all courses at Further Education and Higher Education institutions.

2. Who isn’t covered by the regulations?

• Members of the regular armed forces, full-time and part-time reservists.
• Unpaid volunteers.

3. What does vocational training cover?

• All forms of training and retraining courses, practical work experience and guidance that contributes to employability, training provided by employers or private and voluntary sector providers, vocational training provided by further and higher education institutions and adult education programmes.

4. What do the regulations cover?

• They cover direct and indirect discrimination, harassment and victimisation.
• Employers can be held responsible for the actions of employees in all four cases.

5. Are there any circumstances when treatment on grounds of age will be lawful?

• Exemptions will be allowed on Genuine Occupational Requirement (GOR) and if there is an objective justification. However, both are likely to be difficult to prove.
• The ''test of objective justification'', means employers will have to show with evidence that they are pursuing a legitimate aim and that it is an appropriate and necessary (proportionate) means of achieving that aim.
• The legislation will protect individuals or companies who are forced to discriminate on age grounds in order to comply with other legislation e.g. bar staff serving alcohol must be at least 18.

6. My employees’ pay and benefits vary according to length of service. Can this continue?

• Benefits based on a length of service requirement of 5 years or less, the ‘5 year exemption’, will be exempted and will be able to continue.
• After the 5-year exemption, employers must show that there will be an advantage from rewarding loyalty, encouraging the motivation or recognising the experience of workers by awarding benefits on the basis of length of service.

7. How does the legislation impact on the National Minimum Wage?

• Employers will be able to follow the age bands and minimum wage levels used in the national minimum wage legislation.

8. What should I know about the default retirement age?

• The default retirement age will be set at 65 for men and women. It means mandatory retirement before that age will be unlawful unless a lower age can be exceptionally objectively justified. It does not mean you need to set a retirement age at 65 either – you can operate with no retirement age, or set a retirement age of 65 or higher. All employees will have the ''right to request'' to work beyond any retirement age.
• Employers will have new time-bound responsibilities to inform employees of their ''right to request'' and they will have a ''duty to consider'' all such applications.
• Where an extension of work is agreed, the ''right to request'' and ''duty to consider'' will remain in place when retirement is next considered.

9. What will the new regulations say about occupational pension schemes?

• Occupational pension schemes are included (although the draft legislation allows occupational pension schemes in general to work as they do at present).
• Personal pensions not provided by the employer (except the employer’s own contribution) are not covered by the draft regulations.
• Employers will be able to provide different pension schemes to employees of different ages or with different lengths of service and use minimum and maximum ages for admission to pension schemes and for the payment of pensions.
• The details are fully outlined in the draft regulations - see how to access below.

10. What should I do now?

• Review your employment policies and practices.
• Seek advice if you have concerns. If you do not have access to your own legal advice, Acas is the nominated agency to give advice and guidance on age issues.
• Be prepared


These key facts and answers are for information only. Employers are advised to refer to the Draft Regulations or contact ACAS who are the nominated agency to provide advice and guidance on age issues.


Practical help, information and case studies - see the BE READY mini-site.

Source: Age Positive

The Turner Report
Posted On: 13/12/2005
Posted By: Employer
I find the pension debate very confusing and the Lord Turner report seems to be very complicated, could you summarise the key points for me please?

Answered by Andrew on 15/12/2005
The best way to answer this query is to provide a shortened view of the Pension Commission Final Report November 2005, by Patrick Grattan CEO TAEN - Third Age Employment Network

Implications for work and retirement: TAEN commentary .....

The essence of the Commission recommendations is simple:

1. The basic state pension should rise gradually so that the growth in means testing which erodes incentives to save, is reversed. The pension would be based on residence rather than National Insurance record, thus making it fairer for women and men.

2. The second state pension S2P should gradually decline in significance (they did not recommend getting rid of it outright) to reduced complexity.

3. A new National Pension Savings Scheme (NPSS) should become the main vehicle for modest to middle income people to save in an earnings-related way for a retirement income above the basic state pension. It should be run by the State and have contributions from employee (4%of pay), employer (3%) and the state (1%) in the form of tax relief. It would have running costs at an acceptable level for modest pensions. There would be an incentive to save because of the matching employer and state contribution. It would not be compulsory but employees would have to opt out.

4. The State Pension Age should rise in line with increasing longevity and become more flexible as between those who take it earlier or later.

5. Measures to assist working longer should be put in place. “the continuation of the favourable trends (in the employment rate of over 50s) is essential to further progress” (page 334 of the Turner Report).

The Report does not cover:

The switch from defined benefit to defined contribution occupational pensions and the declining value of those pensions.
The impact of the widening gap between public sector and private sector pension provision.
It does not tackle reform of the system of tax relief on personal and occupational pensions.

There is a 36 page Executive Summary which is an excellent overview. It is on www.pensionscommission.org.uk. The Pension Commission has had to do more than recommend where we would like to get to in 10 or 20 years time. It has had to address how we get there starting from where we are now. This is much harder than stating the ultimate goals.

The Government has promised a response in the Spring.

There is much discussion about raising State Pension Age (SPA). It is important to distinguish between a rise in SPA and a rise in average retirement ages. It would be possible to have a rise in the SPA with limited change in retirement ages. Fewer than 1 in 5 men and a third of women leave work in the year they reach the State Pension (see DWP report no200, Nov 2003). What matters is when people retire.

The impact of that on retirement income is graphically illustrated in Fig 8.1 of the Report. Savings that yield a pension of £11,500 a year at 65 would yield only £7, 500 if started at 60. Changing State Pension Age will have some impact on retirement ages, but it is not the main driver of when most people retire.

Work and Retirement.

The messages and recommendations (page 34 and Chapter 8) about work and retirement are:

1. Strong backing for Age Discrimination Legislation to tackle unfounded stereotypes about age and productivity.

2. Strong opposition to the National Default Retirement Age of 65 and support for the ending of fixed retirement ages as soon as possible. The Commission had already made very clear before the Government’s decision on December 2004 their view that the default retirement age was incompatible with an effective strategy for pensions.

3. The need to tackle irrational fear about working longer and later State Pension Ages. The Commission have obviously been frustrated by much media coverage of the issues which has misinterpreted the data on life expectancy.

4. Government and the Learning and Skills Councils should review all public policies on training to remove all age bias in them. The Commission say that inadequate or inappropriate skills could be a significant barrier to later working life. “Training during adult life is critical to maintaining the employability of older workers”, page 342. In addition to action by LSCs, employers and Government as an employer the Commission ask whether voluntary standards on retraining, perhaps as part of Investors n People, could be developed.

5. The Government should set an example of best practice in employment of older workers including in training and occupational health. The Commissions comment that Government should remove all system features which incentivise early retirement goes to the heart of the current public sector pension issues.

6. Support for the new focus on health and work as it applies to occupational health and workers in mid and later career, to facilitate extension of working life. The health and work strategy should include a “focus on defining the best practices in middle aged and older workers occupational health which will facilitate active labour market participation at older ages” page 344.

7. Consider variable pension arrangements for those who are less advantaged and/or in heavy jobs (many of whom started work 5 years earlier than the typical graduate). This could mean an earlier age threshold for parts of the state pension for those entirely dependent on it and later for those with more means of their own. While this could be argued to penalise those who have planned ahead, the 5 year gap in life expectancy at 65 according to social class (not to be confused with the 10 year gap at birth) is a key issue in the politics of longer working lives. The Commission also throw in the contentious suggestion that annuity rates for occupational and personal pensions might be varied by social class, as they are between men and women.

8. Consider reducing or ending Employer NI contributions for workers over 65, given that they are no longer accumulating any more benefits. The employees NI contributions already stop at 65. This would be an incentive to retaining workers beyond 65.

9. Make the system for deferring State Pension to increase its value at a later date, including a potential lump sum, more flexible and better known. At present only 20,000 pensioners are deferring and at that, only for 2 years (page 336).

The overall message has important implications for all TAEN Members – we need to change attitudes and practice in
the recruitment business and labour markets,
lifelong training and career advice,
workplace health and job design,
individuals attitudes to their potential and opportunities and
the relevant programmes of both Government and employers.


If we keep Adult Learning and Welfare to Work as two frail orphans of public expenditure the Pension Commission hopes for the future will not be realised, at least with any degree of satisfaction and well-being for employees or employers.


Source:
Patrick Grattan

TAEN Dec 2005

TAEN - Third Age Employment Network
207- 221 Pentonville Road
London N1 9UZ