By Jason Theodorou

The government will abandon the default retirement age in the UK from October 2011, preventing employers from losing staff because they have reached the age of 65. Businesses have responded well to the Government announcement, which encourages people to work for longer.

Employers can force employees to retire at the age of 65 under the previous rules. Employers must hold a meeting with a member of staff to talk about their plans six months before the employee's 65th birthday, after which they can dismiss the staff member without compensation.

The government is currently consulting on their plans, including a review of whether the state pension age should be raised to 66 and if the state pension and earnings should be linked.

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'.

Employment Relations Minister Edward Davey said: “With more and more people wanting to extend their working lives we should not stop them just because they have reached a particular age. We want to give individuals greater choice and are moving swiftly to end discrimination of this kind.

“Older workers bring with them a wealth of talent and experience as employees and entrepreneurs. They have a vital contribution to make to our economic recovery and long term prosperity".

“We are committed to ensuring employers are given help and support in adapting to the change in regulations, and this consultation asks what kinds of support are required.”

'For employers, these proposals could make workforce planning and providing some employment benefits, such as critical illness cover, next to impossible'.

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