Both the BCC and the CBI have hit out at the coalition’s proposal to abolish the default retirement age from April 2011.
The BCC’s director of policy, Adam Marshall, says this will restrict the ability of businesses, such as limited company contractors and umbrella companies, to manage their workforce. Although companies agree that the age should rise, it should be set the same as the state pension age or employers should be given a new dismissal option to help them manage their workforce.
The deputy director-general of the CBI said that removing the DRA would cause employers significant problems. Both businesses and PAYE employees benefit from a clear framework for retirement.
However, a senior lawyer suggested that companies could deal with the issue in one of two ways. Firstly they could just accept the fact that the DRA is no more, or they could impose their own age for retirement although this second option could have legal implications.
George Osborne pledged to speed up the plan to increase the pension age to 66 when he gave his budget speech on Tuesday. It was due to be implemented in 2024 but there is now speculation that it may come into force by 2016.
Also in the budget was a potentially disastrous measure that might affect IT contractors. A pension’s adviser claims the coalition could cut the annual limit for pension contributions made by contractors.
The current annual limit is £255,000 and provisional analysis by the government suggests that £30,000 to £40,000 would provide the necessary yield. Many contractors currently minimise their tax liabilities by investing in pensions.
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Image: A Face You Can Never Tire Of Punching by Kaptain Kobold
