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Is "retirement" a thing in today’s world?

Published 20 Nov 2020

Many years ago employees would retire at 60, more recently at 65, and receive Government superannuation.  For some employees additional superannuation arrangements would have been in place to provide extra income to boost the Government payments.  For a fortunate few the superannuation scheme provided by their employer paid an annuity equivalent to 70% or 80% of the annual salary received before retirement.

In addition to the prospect of a superannuation payment some employers, particularly central and local Government, paid a retiring gratuity of up to six month’s salary on retirement and mandatory retirement ages were expressed in employment agreements.

In today’s environment things are very different. KiwiSaver, for most employees, will be their sole form of superannuation saving.  The Government superannuation payment may be sufficient to continue a frugal lifestyle provided one owns their home mortgage free. In 1999 age became a ground for unlawful discrimination in New Zealand. If you have a retirement clause in your employment agreements, or in policy, it is likely to be unlawful and unenforceable unless it was signed prior to 1992.

So maybe retirement is no longer a thing.  People work beyond 65 years of age to earn income, to maintain social contacts and a myriad of other reasons.

Getting older may be a factor in declining job performance levels.  A decline in performance levels by an older employee is never a time to raise, even politely, discussions about retirement. Such action can be taken to be discriminatory and the employee can initiate actions for a personal grievance or alternatively raise an issue under the Human Rights Act.  Either path will result in costs to the employer with the risk of substantial financial penalties being applied as well.

Any issue of this nature needs to be addressed as a substandard performance matter, regardless of the age of the employee concerned, and a good faith process of consultation engaged in to discover causes and possible options for resolving the problem.

If you are experiencing this sort of issue, please call us to discuss before taking action.