The default retirement age (DRA) of 65 is to be phased out by October 2011 to encourage people to work into older age, the government has said.
Business and pressure groups have welcomed the government announcement, which would stop employers forcing workers to retire at the DRA regardless of their circumstances.
Ministers said the change was necessary as people are living longer lives.
The move is one of a number of government initiatives aimed at encouraging people to work for longer as population trends continue to change.
Other steps include reviewing when the state pension age should increase to 66 and re-establishing the link between earnings and the basic state pension.
The Business Department said the consultation, which will run to October, also proposed to help employers by removing the administrative burden of statutory retirement procedures.
“Although the government is proposing to remove the DRA, it will still be possible for individual employers to operate a compulsory retirement age, provided that they can objectively justify it. Examples could include air traffic controllers and police officers,” said the department.
The Chartered Institute of Personnel and Development (CIPD) welcomed the announcement, adding that following many years of campaigning to remove the DRA it was “delighted with the breakthrough”.
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