IOD hits out at retirement proposals

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The Institute of Directors in the South West has criticised today’s Government announcement that it is to phase out the Default Retirement Age (DRA).

Chairman Gerry Jones said: “The Government’s proposal to abolish the DRA tells us that ministers are less focused than they should be on supporting entrepreneurs and the business community.

“Removing the DRA, which gives employers flexibility in managing employees, is incompatible with the Government’s stated desire to boost enterprise and create new jobs.

“In this era of high unemployment the Government should be making it easier for businesses to employ people, not harder.

“The mistake of abolishing the DRA makes it all the more important that the Government works closely with employers to ensure that the new auto-enrolment pensions system does not impose an excessive cost burden on employers.

“Auto-enrolment represents one of the biggest reforms in UK pension provision since the welfare state was founded, but many employers are unaware of them and are unaware of the new duties they will have to perform, as well as the potential cost.

“There will be a need for a very substantial communication exercise from the Government to alert employers to the changes, and we will be working with all the relevant agencies to support this effort.

“The IoD also has some concerns regarding the ‘ratchet effect’ of Auto-enrolment and the risk that the 3% employer contribution will be increased over time by a future government. If this does happen there will almost certainly be a trade-off with employers offering lower salary increases if their labour cost bill is increasing elsewhere.”

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