Employers who are having to deal with the consequences of the retirement age change directive that will come into effect on January 1, 2014, could put their business at financial and legal risk by not preparing adequately.
Recently The Retirement Planning Council of Ireland, in association with Mason Hayes Curran, held the ‘Retirement Age Change 2014’ briefing and emphasised the importance for employers and employees of thinking ahead.
This year will see the state retirement age change from 65 to 66. This will again move up to 67 in 2021 and then to 68 in 2028. These developments are likely to have consequences for employers who may find themselves in a situation where employees who are due to retire will not be eligible for state entitlements they expected.
The Irish Courts demand that employee retirement ages – set by employers - must be legitimate, appropriate and necessary and so employers must show that objective justification for retirement is in place before staff retire and not afterwards. It is important to follow these guidelines and to ensure measures are in place in the event that any legal ambiguity arises. In other words, employers need to plan in advance how they are going to deal with numbers of their employees seeing a change to their retirement age change and have guidelines in place before any issue or disagreement arises. To do this, employers need to understand the options available to them in managing the transition for their staff.
Employers can prepare for the change to the retirement age by following steps such as: identifying, considering and understanding the challenges, liaising with employees to work on an informed solution, taking advice as necessary and checking their contractual retirement age.
More specifically employers should review their workforce statistics (e.g. gender, age, qualifications) to identify those affected on or after January 1st 2014 and the number of employees involved. Also they should take advice and decide on a response to requests to remain in employment beyond contractual retirement age. Finally employers could also consider taking advice on a communication process to raise awareness of the change among their employees in order to minimise confusion in the workplace about the implications of this measure.
According to Elizabeth Carvill of The Retirement Planning Council, “In working with over 400 organisations around the country The Retirement Planning Council understands that the upcoming changes in state retirement age is a very important issue - one that is raising questions among employers and employees alike. Our event aimed to help businesses understand the implications of the changes ahead by highlighting the relevant employment law considerations to Human Resource professionals. The Retirement Planning Council hopes that this will help them prepare themselves to deal with the change and support their staff members approaching retirement.”
The Retirement Planning Council provides lifetime retirement planning support to its corporate members and their employees on lifestyle, health as well as financial advice. Established in 1974, the Retirement Planning Council is an independent body, with a voluntary Board of Directors and has worked with over 3000 companies throughout Ireland.