The Default Retirement Age (DRA) is to be scrapped, The Employment Relations Minister Edward Davey has announced.
This means employers will no longer be able to force staff to retire the moment they turn 65.
The new rule will be phased in between April and October and no forced retirement notices will be issued from April.
The coalition government first floated the idea of jettisoning the Default Retirement Age in July last year in an attempt to tackle issues of an ageing population and the shortfall in pension savings.
The move follows campaigns by charities such as Age UK who argued people over the age of 65 could still make a valuable contribution to the economy.
Employers will still be able to operate a compulsory retirement age in some circumstances,The Department for Business said, such as in the case of air traffic controllers and police officers.
The Department for Business said that as well as benefiting individuals, “the freedom to work for longer will provide a boost to the UK economy”.
However the The Institute of Directors has criticised the move arguing that it will reduce the flexibility for some employers.
The announcement coincides with the government’s plans to raise the state pension age to 66, as laid out by Chancellor George Osborne last year.