The Government has brought forward plans to review the UK's default retirement age, which allows employers to force certain staff to retire at the age of 65, to 2010, a move that has been largely welcomed by the industry.

As it stands, an employer may dismiss an employee at the age of 65 without redundancy payments. The announcement follows the return of the high-profile Age Concern/Help the Aged case to the High Court this week, which is trying to clarify whether the enforceable retirement age is legal.

Faith Dickson, partner at pensions law firm Sacker & Partners LLP, commented: "I am not surprised to see the Government bringing forward the review of the default retirement age. Not only are the consequences of supporting an ageing population becoming clearer, but the Government is presumably weighing up the arguments it is going to use in the UK courts in the Age Concern case about why an age 65 default retirement is justified for discrimination law purposes.

"However, there is surely a fine balance between making sure people are not forced to retire sooner than they want to, and ensuring people coming out of school and university are not condemned to years of unemployment - particularly in the current economic climate. It's not impossible that removing the default retirement age early could discriminate against younger people trying to enter a difficult job market."

Standard Life agrees that the move is a welcome one, with John Lawson, head of pensions policy, adding: "It is time to remove barriers to working into later life and support people in having the flexible active future they aspire to."

Pensions provider Scottish Widows has warned, however, that the potential results of the review, which could see the retirement age extended, will not be welcomed by everyone. "While there are many people that would like, or may need, the flexibility to work past the age of 65, the majority of people continue to hope to retire earlier, on average at age 61," said Alison Morris, senior manager, retirement income and planning. "But the real issue that needs to be tackled is ensuring that the nation saves adequately for their retirement so that they have the option to retire when they want to rather than being forced to work longer."

- Pensions Age July 2009

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