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Almost nine in 10 employers admit failings with post-DRA compliance

The default retirement age (DRA) was abolished more than three years ago, yet new research from Jelf Employee Benefits suggests that the vast majority of employers still have some way to go to fully understand, comply and communicate the landmark legislation change that prevents older employees being forcibly retired on the grounds of age alone.

Only 12 per cent of employers believe that their organisation has fully complied with the legislation. A third of respondents (34 per cent) feel they need to improve all aspects of compliance; with a further third (32 per cent) expressing concern about their employee communications on this topic.

Other areas for improvement include contractual promises (four per cent) and understanding and reviewing insurer terms and conditions (18 per cent).

Commenting on these findings, Steve Herbert, head of benefits strategy at Jelf Employee Benefits said: ‘This is quite alarming, and from a benefits perspective we are really quite concerned that employers may not have fully understood the options for providing cover to the over 65s in their workforce.’

Employers face a choice for this older grouping. The legislation allows for some benefits (for instance Group Life and Group Income Protection) to cease at age 65. Alternatively, the employer can ask for the scheme insurer to extend cover past that age, although this option is generally restricted when the insurer’s maximum age limit is reached. The final option is to self-insure the risk — which is potentially a high-risk strategy for older workers who are statistically more likely to become seriously ill than their younger colleagues.

Herbert concluded: ‘Regardless of which benefit option is selected for older employees, the onus is on the employer to ensure that communications of such choices are clear and unambiguous. Failure to do so could well leave the employee without valuable benefit cover, or the employer effectively self-insuring major benefit risks. We would strongly urge all employers to revisit this important area to ensure full compliance.’

Photo by Stuart Miles, sourced from freedigitalphotos.net.

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