Following the Government's proposals to scrap the default retirement age, experts fear they could have an impact on employers health policies.

According to Mercer, with the growing incidence of major illnesses with age and increasing sickness absence, the cost of providing employee risk and healthcare benefits will rise. Some benefits may even become uninsurable for older employees.

Mercer has recommended companies review existing benefit structures to ensure they remain cost-effective and continue to meet employer and employee requirements.

Companies will also need to reflect the different requirements of an older workforce in their benefit schemes.

Jamie Marshall, principal in Mercer’s health and benefits business, said: "Changes to demographics in the workforce mean that employers need to address the impact of longer working lives on the design of their benefit arrangements. The frequency of major illnesses typically escalates with age and could significantly increase expenditure on risk and healthcare benefits.

"There are several steps that employers can take to alleviate these costs. We advise organisations to reassess their current benefit policies to ensure they meet the changing needs of employees cost-effectively, and reflect the removal of the default retirement age."