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Friday, April 27, 2012

Too old to work too young to retire

In the UK you cannot force somebody to retire at state retirement age - right?  Wrong? Maybe? Don't know?

If you answered any of the above you would be right.

Yesterday there was a landmark judgement by the Supreme Court that has taken a straightforward issue and made it infinitely and (in my view) dangerously uncertain.

Do older people need to keep working to earn enough money to retire? Well, the highly respected Pensions Policy Institute (PPI) reckons they do. In a report published on the same day as the idiocy from the court, the PPI's research concludes that Around 45% of those aged between 50 and state retirement age (SPA) in 2011 and still in work, might need to work and save for 11 or more years after their SPA in order to meet a target replacement rate of working life income. Yes, that is eleven more years.

When you cut though all of the legal waffle the outcome of the court is this:

A company cannot sack somebody just because they have reached retirement age.

BUT

A company can sack somebody if it is for the greater good of mankind (e.g. inter-generational fairness)

So what this means is a court has to decide if sacking Joe Bloggs because he is 65 is OK to give a job to school leaver (not of course that school leaver could do that job) or is it best for Joe to continue working so he has some chance of retiring with enough money to heat his house.

The only explanation how we have got ourselves in this ludicrous position is that a bunch of lawyers see the opportunity for another bunch of lawyers to argue about this subject (and get paid for it) until the cows come home.

The implication for the individual is that they have zero idea if their company is going to show them the door when they reach retirement age. This cannot be right. Dick Stroud

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