From the 6 April, businesses will be prevented from making employees stop work through existing default retirement age procedures. Any notice issued before this date has until 1 October to be effected, but after this phasing out period no employees will be able to be retired by the employers without their consent.
Exceptions will be made for employers who can "objectively justify" compulsory retirement, such as in the police force or air traffic control.
Introducing the measure, the Minister for Employment Relations, Edward Davey (pictured), said: "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. If someone wants to stay in work they should have that choice, which is why today the Government is announcing it is signing the default retirement age to the history books."
Rachel Krys, campaign director of age campaigners the Employers Forum on Age (EFA) said:
"Some employers have been successfully managing without forced retirement for a number of years, proving that organisations can thrive without retirement and become leaders in their sectors.
"Business performance will improve when employees are used to their full potential, managed throughout their careers and not cast aside as they enter their 60s or encouraged to coast towards retirement.
The Chartered Institute of Professional Development welcomed the news, saying that age is not key determinant of capability.
The institute’s public policy adviser, Dianah Worman, said: "Much of the language deployed by some opponents of today’s announcement talks in derogatory terms about making it more difficult to ‘get rid of people’.
"This kind of corrosive language not only affects people at retirement – it can blight the careers of older employees filed by ineffective and poorly trained managers in the ‘retirement pending’ tray."
Jonathan Watts-Lay, director of financial education providers Wealth at Work, pointed to the fact that the introduction of the new system is only three months away.
"Employees must be in a position to consider the likely personal impact," Watts-Lay said. "To do so, they will require the support and guidance of their employer in seeking to make sense of the changes, so an assessment can be made in the context of the reduced annual and lifetime allowances".
New guidance has been drafted to help businesses adapt to the changes, and is available on the Advisory, Conciliations and Arbitration Service (Acas) website here.
Acas chief executive John Taylor said: "We stand ready to assist any employers who have been operating with a retirement age adapt to the change in the law."
Current Employment Equality (Age) Regulations have been in place since 1 October 2006.
The Department for Business, Innovation and Skills estimates that there are currently 850,000 workers over the age of 65.
