This is not totally bad. There are definitely advantages to this. It will like hurt long term retention, but might strengthen mid-term retention. I may well have gotten out at the 8-10 year point if something like this was in place. However, in hindsight, I’m glad it wasn’t.
Also, with an up or out policy a sizable fraction are let go in mid career. I was and back then they gave a severance. That big severence got taxed pretty soundly. This would ease that as well