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Mandatory retirement

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Mandatory retirement

Mandatory retirement also known as forced retirement, enforced retirement or compulsory 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.

As of 2017, as reported by the Organisation for Economic Co-operation and Development (OECD), only three European member states (UK, Denmark and Poland) and four OECD countries (Canada, Australia, New Zealand, United States) had laws banning mandatory retirement.

Typically, mandatory retirement is justified by the argument that certain occupations are either too dangerous (military personnel) or require high levels of physical and mental skill (air traffic controllers, airline pilots). Most rely on the notion that a worker's productivity declines significantly after age 70, and the mandatory retirement is the employer's way to avoid reduced productivity. However, since the age at which retirement is mandated is often somewhat arbitrary and not based upon an actual physical evaluation of an individual person, many view the practice as a form of age discrimination, or ageism.

Economist Edward Lazear has argued that mandatory retirement can be an important tool for employers to construct wage contracts that prevent worker shirking. Employers can tilt the wage profile of a worker so that it is below marginal productivity early on and above marginal productivity toward the end of the employment relationship. In this way, the employer retains extra profits from the worker early on, which the employer returns in the later period if the worker has not shirked their duties or responsibilities in the first period (assuming a competitive market).

Compulsory retirement is generally unlawful throughout the various State and Territory jurisdictions in Australia. Among exceptions to the general rule, permanent members of the Australian Defence Force must retire at the age of 60 and reservists at 65. As well, since the passage of a constitutional amendment in 1977, judges on federal courts are required to retire at the age of 70.

The Constitution of Brazil says in Article 40, Paragraph 1, Item II, that all public servants in the Union, States, Cities and the Federal District shall mandatorily retire at the age of 75. This regulation encompasses servants from the executive, legislative and judicial branches. It also applies to the Supreme Federal Court Justices, as per Article 93, Item VI, of the Constitution, and the Court of Accounts of the Union Judges, as stated in Article 73, Paragraph 3 of the Constitution (disposition added after the 20th Amendment).

The normal age for retirement in Canada is 65, but one cannot be forced to retire at that age. Labour laws in the country do not specify a retirement age. Age 65 is when federal Old Age Security pension benefits begin, and most private and public retirement plans have been designed to provide income to the person starting at 65 (an age is needed to select premium payments by contributors to be able to calculate how much money is available to retirees when they leave the program by retiring).

All judges in Canada are subject to mandatory retirement, at 70 or 75 depending on the court. Federal senators cease to hold their seats at 75.

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