Compulsory retirement, also known as forced retirement or mandatory retirement, is the set age at which people who hold certain jobs or offices are required by industry custom or by law to leave their employment or retire. It is the involuntary job termination of an older worker, usually as part of a wider company downsizing. Here are some key points about compulsory retirement:
- It is typically justified by the argument that certain occupations are either too dangerous or require high levels of physical and mental skill.
- Most rely on the notion that a workers productivity declines significantly after age 70, and the mandatory retirement is the employers way to avoid reduced productivity.
- Economist Edward Lazear has argued that mandatory retirement can be an important tool for employers to construct wage contracts that prevent worker shirking.
- In New Zealand, there is no mandatory retirement age except if working in a job that clearly specifies a mandatory retirement age. The normal age of retirement is the same as the beginning of pension payments, which is 65.
- Since 1986, mandatory retirement has been generally unlawful in the United States, except in certain industries and occupations that are regulated by law, and are often part of the government (such as military service and federal police agencies, including the Federal Bureau of Investigation) .
- Companies that want to downsize without layoffs sometimes offer their most senior employees an early retirement package.
- The American Society of Actuaries advises workers who are being forced to retire to consult a lawyer before signing any documents or waivers offered by their employers. The conditions may be negotiable.
- Mandatory retirement is controversial, as many people believe that it is unfair to force employees to retire against their will. Some opponents of mandatory retirement argue that it is discriminatory, as it disproportionately affects older employees. Others claim that it is unnecessary, as most people are healthy and able to work well into their 60s or 70s.
