The group risk industry has warned that Government plans to fast-track a review of the UK retirement age could lead to significant problems and expense for providers and clients if not undertaken correctly.
Group Risk Development (GRiD), the trade association for providers and brokers of group risk benefits, said serious consideration needs to be given to the practical implications of completely removing the default retirement age (DRA).
Katharine Moxham, spokesperson at GRiD, said: "While no one can put forward a reasoned argument against equality per se, as it stands, continuing benefits indefinitely for those working beyond DRA could be a prohibitively expensive process."
The measure was announced yesterday by Harriet Harman, deputy leader of the Labour party, with the view that older people should have the right to carry on working if they wish to, and should also be able to adopt flexible working hours if needed.
However, Moxham believes that legislation presently being debated is sufficient to fulfil this desire.
"The 2009 Equality Bill currently progressing through Parliament will make discrimination on the basis of age in the provision of goods and services unlawful but there will be an exception for financial services - so far, undefined - providing differences in treatment are broadly proportionate to changes in risk," she said.
"Hopefully, this will bring long awaited clarity around the legality of ceasing group risk benefits at a specific age."
"The increasing risk of payout that accompanies increased age and failing health for all group risk products, combined with the potential for longer term claims for group income protection, means that these products may become prohibitively expensive for everyone (not just older employees) unless the industry is allowed to price a group risk product with a finite period of cover i.e. a fixed age or event where provision of benefits can lawfully cease," she added.
