The default retirement age (DFA) of 65 will be abolished by October 2011 under new government plans.

Currently employers can force staff members to retire once they reach the age of 65 as long as they are given prior notice at least six months before their birthday. This means the changes could be felt by as early as April next year.

Ed Davey, employment relations minister, 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”.

He continued: “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”.

The government hopes the rise in the retirement age will encourage more people to continue working causing an increase in taxation capital. The growth in life expectancy means the extra money could be used to support the increasing elderly population living in the UK.

Rachel Krys, campaign director for the Employers Forum on Age (EFA), said: “This is an incredible leap forward on employment practices and great news for individuals. With rising life expectancies, and people staying fitter for longer, it is archaic to assume that someone’s age is an indicator of the contribution they can make to the workplace”.

The charity Age UK was one of the groups in favour of the change and had fought to get the government to take action. “It is a massive win for hundreds of thousands of employees who are at risk of being forced out of their jobs”, said a spokeswoman.

However, concerns have been raised by other parties affected by the scrapping of the DFA. John Cridland, deputy director general of the Confederation of British Industries, 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”.