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And the benefits for each additional year that the employee works are added to a separate account in a lump sum as a part of the employee’s retirement plan.
A deferred retirement plan program is option and there is no maximum limit to enter the program. It should not be seen as a way of rid of older employees. However, the question that is constantly asked whether there is age discrimination in deferred retirement plans.
By itself, deferred retirement plans do not have any age discrimination. But there are certain features that raise age discrimination issues. For instance, if the deferred retirement plan is only available between the earliest age of retirement as per the program and the normal age of retirement, it would be discriminatory towards employees based on how close these employees are to normal retirement age.
The other matter of concern with regard to age discrimination in deferred retirement plans is the way the plans are presented to older employees. For instance, employees are told that if they do not accept the plan, they will be laid off without getting the security that the plan offers.
That is why employers have to make an effort to ensure that employees who enter deferred retirement plans should submit an appropriate retirement letter which marks the end of their normal employment and starts the process of entering in the plan. In addition, the letter should comply with the Age Discrimination in Employment Act and there should no violation of the act. Even other employment practices should be examined that there is no age discrimination.
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