A review of the so-called default retirement age, which allows employers to require staff to retire at 65, is to be brought forward by a year, the Government announced today.
Ministers had previously pledged to look again at the measure in 2011, but it will now be held next year to respond to "changing demographic and economic circumstances."
Pensions minister Angela Eagle said most people retired before 65, with 1.3 million choosing to work beyond state pension age, and many more saying they would work past 65 if their employer permitted it.
The minister said it was time to look again at the default retirement age, adding: "Some people prefer to take early retirement, others prefer to keep working. We want to give older people flexible retirement options.
"The Government is responding to the changed economic landscape. The different circumstances today - for businesses, and for individuals coming up to retirement - suggest that an earlier review is appropriate.
"As Britain's demographics change, it is sensible that we have the debate on what works for business and individuals. The retirement laws need to reflect modern social and economic circumstances."
TUC general secretary Brendan Barber welcomed the announcement, adding: "It cannot be right that an employer can sack someone simply for being too old. Employees should have choice - neither forced by employers to give up work, nor forced by inadequate pensions into working longer than they should.
"A key challenge as we live and stay active longer is developing the right kind of jobs, support and training for older workers."
Michelle Mitchell, charity director for Age Concern and Help the Aged, described the move as a "step in the right direction," but said it was not enough.
"The Government should immediately put a stop to an arbitrary and unfair rule which stops people from working, simply because of their age.
"Older workers make a huge contribution to the economy and will have the skills and experience needed to boost recovery as we come out of recession.
"Many older people want to be able to continue to work beyond 65. For some this is because they need to boost their pensions or simply pay the bills, but for many it is because they love their jobs and see no need to stop working when they can still do them well."
Katja Hall, the CBI's director of human resources policy, said the Government's announcement was "disappointing", especially at a time when so many businesses were under pressure.
"Having a default retirement age helps staff begin the process of deciding when it is right to retire, and helps firms plan ahead with more confidence.
"At the moment, anyone can ask to work beyond the age of 65, and their employer must consider their request.
"Our research shows 81 per cent of these requests are accepted, showing companies don't want to lose good people, whatever their age.
"Some people can happily work in their existing job beyond the age of 65, but this is not possible for all occupations, and companies with small numbers of staff have particular problems adapting jobs to the needs of older workers."
Denise Keating, chief executive of age campaigners the Employers Forum on Age, said: "We are absolutely delighted that the Government has finally listened to reason and taken action to tackle an archaic system which allows the enforced retirement of people simply because of their age."Reuse content