The Coalition Government’s decision to go ahead with the abolishment of a default retirement age has been welcomed by the Equality and Human Rights Commission (EHRC).

EHRC Deputy Chair Baroness Margaret Prosser said: “We believe today’s announcement will make it easier for businesses planning their workforce. It will simplify retirement planning from what is, at the moment, quite a bureaucratic process.  Employers will now only need to assess the fitness and capability of their workforce, something responsible businesses will already be doing, giving everyone a level playing field.”

The EHRC has argued that, at a time when Britain faces its toughest economic climate for decades, it makes good business sense to keep people in the workforce for longer; decreasing welfare costs and increasing spending power.

“Older workers have been telling us for some time now that radical change is what is needed to keep them in the workforce,” Baroness Prosser added. “At the same time, employers have been telling us that it makes good business sense for them to be able to recruit and retain older workers. Keeping older Britains in the workforce has benefits all round.”

However, a small business support group disagrees, insisting businesses could be forced to start keeping on staff indefinitely.

The Forum of Private Business believes that this could prove highly damaging to thousands of small firms. “Currently, there is nothing to stop an employee working on past 65, providing his or her employer agrees to it,” a spokesperson said. “Many businesses are well aware of the skills and experience older workers provide and are happy to maintain their employment.”

Forum spokesperson Chris Gorman said: “Many small businesses are happy to keep on members of staff well into their late 60s and 70s – indeed, many Forum members themselves are well over 65.

“However, for those employees not willing to leave voluntarily, there will eventually come a time when the needs of the business will have to be considered,” he added.

“In the absence of a default retirement age, the only viable option available to an employer is a capability dismissal based on the declining competence of the worker,” he said. “We believe this would be an undignified and humiliating end to a career for most staff.”