The coalition government has said that it will be scrapping the default retirement age (DFA) of 65 from October 2011, a move that has been welcomed by unions and charities but has been met with concern from business.
The government's plan means that employers will no longer be able dismiss staff without compensation once they reach 65, neither could they issue forced retirement notices after 6 April 2011.
The charity Age UK has welcomed the proposal saying it is a "victory" against "age discrimination".
Michelle Mitchell, Age UK Charity Director, said, "Everybody stands to win from scrapping forced retirement. People over 65 will have full employment rights for the first time. The economy will benefit from older workers' precious skills and experience and their increased buying power. Public finances will receive a boost from more people paying taxes for longer."
Brendan Barber, General Secretary of the Trades Union Congress also welcomed the move saying, "It cannot be right that workers lose their protection against arbitrary dismissal overnight because of their age.
"But we need to go further to give people real choice about how and when they retire with new rights for flexible working. This can end the retirement cliff-edge where people work full-time one day and stop work the next. Many would prefer a phased retirement.
"Not everyone wants to work longer and may not be fit enough to continue. Today's move should be about choice, not an expectation that people will work longer so don't need decent pensions."
The Confederation of British Industry said that axing the DRA and especially the speed of its implementation raised many complications for employers.
John Cridland, CBI Deputy Director-General, said, "The decision to abandon the DRA leaves business with many unresolved problems, and the Government's timetable to scrap it will give companies little time to prepare.
"Scrapping the DRA will leave a vacuum, and raise a large number of complex legal and employment questions, which the Government has not yet addressed. This will create uncertainty among employers and staff, who do not know where they stand. There will need to be more than a code of practice to address these practical issues; we will need changes in the law to deal more effectively with difficult employment situations.
"For employers, these proposals could make workforce planning and providing some employment benefits, such as critical illness cover, next to impossible.
"A default retirement age helps staff think about when it is right to retire, and also enables employers to plan more confidently for the future. In certain jobs, especially physically demanding ones, working beyond 65 is not going to be possible for everyone."