The group risk industry should be smiling broadly not merely breathing a sigh of relief following the confirmation of an exception from retirement age legislation, said Swiss Re.
The re-insurer believes the result is just reward for a long a patient process and is an excellent example of how the industry can come together over critical issues.
However, while the exemption for group benefits provided by employers is almost universally applauded, concerns have been raised about the decision to remove the default retirement age.
Ron Wheatcroft, vice president of client markets Europe at Swiss Re, was very close to the discussions between the industry and government which have been ongoing since 2006 when the previous legislation was implemented.
"The exception is really good news and I'm really pleased to see it," he said.
"It's the end of a very long process of discussion with government bodies and I think it reflects extremely well on all those who've been closely involved at a trade body level. It shows that the benefits you get with mature discussion with government about issues and their consequences.
"As we felt the government has understood our messages better we had become more optimistic that we would get the outcome we wanted so think it's definitely a day for big smiles rather than just sighs of relief," he added.
Wheatcroft was also pleased with the strength of the proposal issued, suggesting this was a key anchor for the industry.
"Its good news inparticular that we got an exception rather than guidance," he explained.
"While guidance would have been helpful, it could still have left uncertainty in the minds of a number of employers who would have then had to go back and interpret what it meant in their circumstances.
"It's an example of where the industry can do very well with quiet and measured lobbying which is not around confrontational approaches but just making sure that civil servants and government officials are fully aware of issue and consequences," he added.
Had an exception not been included, many within the industry believe the group market could have been significantly damaged as employers faced potentially dropping benefit packages or only being able to offer limit term policies.
The latter was a course of action most in the industry felt was imperfect at best.
James Walker, technical manager for group protection at Legal & General, noted that this was a very real danger.
"We're very pleased that the government have recognised the importance of group risk benefits and are providing an exemption for employers who provide them," he said.
"Without this, there was a strong possibility that employers would seriously reduce or withdraw benefits altogether. Group benefits represent a significant proportion of the insurance cover in the UK so it's important that these valuable benefits are protected," he added.
However, the overall decision has not been welcomed by all, with research from international law firm Ashurst suggesting that almost half (46%) of businesses would prefer the DRA to remain.
Handling the termination of employment of older employees (85%) and difficulties with succession planning (54%) came out as the biggest concern from employers, but these were followed by increased costs (34%) which included the provision of employee benefits.
Caroline Carter, head of the employment practice at Ashurst, explained that employers wishing to now have a compulsory retirement age will need to objectively justify it.
"Given the government's views that the DRA should not be used as an alternative to proper performance management, it appears that employers will have to rely on succession planning or health and safety to justify their retirement age," she said.
"Although recent European case-law on objective justification has been quite helpful for employers, interestingly the UK courts have generally adopted a stricter approach.
"In light of the current case-law, and unless the courts adopt a "softer" stance given the abolition of the DRA, it seems that justifying any compulsory retirement age of 65 or under will be problematic, if not impossible in an office-based context," she added.
Carter did recognise the group insurance exception as good news for employers.
