Definition
Compulsory Retirement, often referred to as Mandatory Retirement, is the policy or practice where employees are required to retire from their positions upon reaching a certain age. Historically, this age has been commonly set at 65. In many cases, compulsory retirement is stipulated in union contracts or company policies.
Evolution of Compulsory Retirement Policy
Effective January 1, 1979, federal legislation in the United States stipulated that the private sector could not enforce compulsory retirement policies. This marked a significant shift in employment practices, reflecting changing societal attitudes towards aging and workability. Additionally, there is no set retirement age for federal employees, allowing them to continue working as long as they can fulfill their job responsibilities.
Examples
- Teaching Staff: A university previously required professors to retire at the age of 65, but following the new federal legislation, this policy was abolished, allowing professors to continue teaching if they wish.
- Airline Pilots: Many commercial airlines have altered their policies to align with federal regulations, extending the maximum age limit for pilots.
- Corporate Firms: Companies that once had strict retirement ages for executives have shifted to performance-based assessments, allowing employees to remain in their roles based on their ability rather than age.
Frequently Asked Questions (FAQs)
What is the difference between compulsory retirement and voluntary retirement?
Compulsory retirement mandates employees to retire upon reaching a certain age, while voluntary retirement allows employees to choose when they retire, often incentivized by pension plans or retirement packages.
Has the compulsory retirement age changed over the years?
Yes, federal legislation passed in 1978, effective January 1, 1979, stipulated that compulsory retirement policies could not be enforced in the private sector.
Are there any sectors where compulsory retirement is still enforced?
Certain professions like airline pilots and judges may still have age limits, though these policies often come under scrutiny and are subject to change.
Why was compulsory retirement common in the past?
Compulsory retirement was common as a means of ensuring turnover within companies, allowing younger employees to advance and potentially bringing fresh perspectives to the workforce.
Related Terms with Definitions
- Age Discrimination in Employment Act (ADEA): A United States labor law that aims to protect employees 40 years of age and older from workplace discrimination based on age.
- Pension: A regular payment made to retired employees, sometimes used as an incentive for voluntary retirement.
- Early Retirement: An option that allows employees to retire before the conventional retirement age, often supported by financial incentives or pension benefits.
Online References
- Investopedia - Compulsory Retirement
- U.S. Equal Employment Opportunity Commission - Age Discrimination
Suggested Books for Further Studies
- “Working Longer: The Solution to the Retirement Income Challenge” by Alicia H. Munnell and Steven A. Sass
- “The Economics of Aging” by James H. Schulz
- “Social Security and Retirement around the World” by Jonathan Gruber and David A. Wise
Fundamentals of Compulsory Retirement: Employment Policy Basics Quiz
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