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and local job and volunteering opportunities, to help improve the
employment prospects of jobless people aged 50 and over.
We will also pilot the use of local agents based in the business
community to raise employer awareness of the business benefits of
recruiting and training older workers. These agents will focus on
those sectors experiencing skills and labour shortages in their area.
Tackling age discrimination
Code of Practice
The Government is tackling age discrimination by encouraging
employers to adopt the standards set out in the non-statutory Code
of Practice on Age Diversity in Employment, which was published
in June 1999. The Code sets the standard for non-ageist approaches
to recruitment, training, promotion, redundancy and retirement.
Guidance accompanying the Code helps employers to realise the
benefits of adopting non-ageist employment practices.
Our evaluation of the Code’s impact indicates that a third of
employers are now aware of the Code and the use of age criteria in
recruitment has halved from 27 per cent to 13 per cent. Research
evidence shows that employers with an age-diverse workforce enjoy
lower staff-turnover rates, lower absenteeism and have workers with
higher levels of motivation and efficiency.
An updated Code of Practice, taking into account lessons from the
evaluation, was launched as part of Age Positive week on 3
December 2002.
Project Workshops for smaller employers
We are also developing and delivering workshops for small and
medium-sized employers on the business case for age diversity. The
workshops enable employers to compare their current practices in
the context of changes in demography and the business
environment, analyse the business implications of ageism and
explore the benefits of workforces with mixed ages. This encourages
employers to adopt non-ageist employment practices, according to
the standard set by the Code. Workshops were delivered throughout
England in 2001 and 2002, and are being delivered in Scotland and
Wales in 2003.
European Employment Directive on Equal
Treatment
The Government wishes to set out clearly what the European
legislation on Equal Treatment will require so that employers will
have sufficient time to familiarise themselves with new
requirements, and adapt their practices accordingly before it is
implemented. We seek to introduce legislation that works in
practice to remove unfair discrimination. That means taking action
where there is clear justification – but without stifling business with
unnecessary burdens.
There are many complex and sensitive issues that need to be
addressed and resolved so that the eventual legislation is practical
and helpful to employers and employees alike. One of these issues is
retirement ages. Under the Directive, compulsory retirement ages
are likely to be unlawful, unless employers can show that they are
objectively justified.
In advance of legislation, we will work with national and local
partners to provide employers with the further advice and support
they need to benefit from non-ageist employment practices now,
and also to help prepare them for the legislation ahead.
Special Categories of Workers
Extending Working Life and Flexible Retirement
As people are living longer nowadays and want a good standard of
living in retirement, they either have to save more or work longer, or
combine a mixture of both. It is in the interest of businesses as well
as pensions savings to do away with inflexible and outdated
approaches to retirement.
The Government is tackling the barriers to flexible retirement to
allow people the opportunity to move gradually from full-time work
to retirement – too many people feel they have no choice but to retire,
because they cannot reduce their hours or level of responsibility.
Our strategy must also help people to work beyond State Pension
age if they want to. People should not stop work simply because
they reach 60 or 65. Far from it – at this point in their lives most
people could still have many productive years ahead of them. This is
the point at which people can start to draw their State Pension, not
the point at which they necessarily should.
State Pension Age
State Pension age is being equalised at 65 for men and women
between 2010 and 2020, and both men and women aged between 60
and State Pension age will be entitled to the full range of job-search
support and benefits available.
More generous increases for deferring state pensions
The Government intends to ensure that people who choose to work
beyond State Pension age and defer taking their pension are
properly rewarded by the State system. Currently, a person who
does not draw their pension at State Pension age has their pension
increased by around 7.5 percentage points for each year it is
deferred, up to a maximum of five years. Under existing legislation
this will increase to around 10.4 percentage points for each year in
2010. We now expect to be able to make the change by 2006.
As well as improving arrangements for deferral, the Government
proposes to offer a choice of either an increased regular State
Pension or a taxable lump-sum payment, to compensate people
adequately for deferring their pension. Some people may find the
prospect of a lump sum more attractive than a comparable regular
pension increase. These proposals would help to give people a
choice over when they take their State Pension. The changes would
encourage people to work beyond State Pension age and ensure that
they are rewarded properly for having done so.
Flexible retirement and occupational pension rules
A flexible approach to retirement ages would remove the cliff edge
that many people face when moving from full-time demanding work
to complete retirement. The Government believes that more people
would like to make use of such flexibility. However, in the past the
tax treatment of pensions has dissuaded some people from doing
this.
Currently, tax rules allow people to work and draw an occupational
pension, but only where they no longer work for the company that is
paying the pension. Often people who would like to carry on
working do not want, or are unable, to change employers at this
stage in their career. So they end up retiring when they would have
preferred to stay in work in a reduced capacity, supported by a
combination of earnings and pension. The Government proposes
to remove this constraint. As part of the Government’s consultation
on the simplification of the pensions tax regimes, we are proposing
to allow schemes which offer people the opportunity to continue
working for the sponsoring employer while drawing their
Spring 2003 | European Employment Observatory Review 35