Voluntary redundancy and early retirement

Care should be taken to ensure that employees, regardless of age, are not pressured into volunteering for voluntary redundancy.

Many pension schemes, particularly defined-benefit pension schemes, provide enhanced entitlements for people who take early retirement. In order to avoid redundancies, for example, an employer might offer to let older employees retire before their pension age with an enhanced pension so that they receive a full, rather than actuarially reduced, entitlement.

These pension rules are exempt from the age discrimination challenge, but only for employees who were eligible to be members of the pension scheme before the Age Regulations came into effect in October 2006. If an employer wants to cover later joiners, it must demonstrate that there is an objectively justified reason for providing early retirement opportunities.