Government to announce retirement age shakeup

Ed Davey to scrap automatic retirement at 65, coinciding with publication of pensions bill

Employers will no longer be able to force staff to retire at 65 from October, the government will announce today.

Fulfilling a pledge in the coalition agreement, the employment relations minister, Ed Davey, is to herald the end of the default retirement age.

But the Institute of Directors has criticised the move featured in the Conservative and Liberal Democrat election manifestos for reducing flexibility for employers, even though fewer than a third of companies still insist on people retiring on their 65th birthday.

Officials said the change was being phased in between April and October, giving firms time to prepare and change their human resources policies.

Davey is due to say: "Older workers have a lot to offer in the workplace and it's time we got rid of this outdated form of age discrimination. We will do all we can to support businesses with the change."

The announcement coincides with the publication today of the pensions bill, which includes raising the state pension age to 66, as announced by the chancellor, George Osborne, in last October's spending review.

Companies are also to be required to automatically enrol their staff in pension schemes, a move expected to force employers to reduce their contributions for existing members.

Pensions expert David Robertson, of the Association of Consulting Actuaries, said research indicated many large companies were considering "levelling down" their contributions as a response to auto-enrolment.

He said: "A lot of big firms are looking at levelling down their contributions because they are looking at paying contributions for a lot more employees."

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