Government asks advice group to settle Whitehall row on retirement

The Government has been forced to set up a consultation group to consider whether it should ban companies from having mandatory retirement ages after failing to reach a decision within its own ranks.

The Government has been forced to set up a consultation group to consider whether it should ban companies from having mandatory retirement ages after failing to reach a decision within its own ranks.

The issue lies at the heart of the Government's forthcoming age discrimination laws which have provoked controversy between industry and unions as well as within the Government.

The group, made up of lobbyists for industry, unions and older workers as well as Adair Turner, the author of the recent Pensions Commission, has met twice but has so far failed to agree on a recommendation to the Government.

A final meeting has been scheduled for the week starting 8 November, but business groups are not convinced that a compromise can be reached.

"As we understand it, the group is struggling to come to an agreement," said a spokesman for the Engineering Employers Federation.

The manufacturers' group is advocating a more flexible default retirement age so that employees can negotiate to continue working beyond 65.

The Government is under intense pressure from businesses to make a decision so that draft guidelines due out early next year are not delayed, giving sufficient time to prepare for their implementation in 2006.

Neil Bentley, the head of skills and employment for the Confederation of British Industry, which is pushing for mandatory retirement at 65, said a decision was needed urgently.

"It's a massive task and there are lots of questions which remain unanswered," Mr Bentley said. "A decision hasn't been made because there's tension between the Department of Trade and Industry and the Department for Work and Pensions about how to resolve this issue."

Law firm Allen & Overy has warned that the new laws pose a substantial burden on businesses and they are likely to affect employer schemes such as pensions, loyalty and redundancy programmes, as well as remuneration.

Allen & Overy partner Julie Quinn said companies' mandatory retirement ages were likely to be found discriminatory under the rules.