Under a new proposal business owners would not be allowed to dismiss a member of staff because they have reached the age of 65

The government hopes the change will encourage people to work for longer

The government have announced that they plan to end the default retirement age of 65 in the UK from October 2011.Under the new proposal business owners would not be allowed to dismiss an employee because they have reached the age of 65.Under the current law an employer can force an employee to retire at the age of 65 without paying any financial compensation. The only obligation on an employer is to hold a meeting with the member of staff to discuss plans at least six months before their 65th birthday.While many have welcomed the government launching a consultation process about scrapping the Default Retirement Age (DRA) age, the Confederation of British Industry (CBI) have reacted cautiously to the news."The decision to abandon the DRA leaves business with many unresolved problems, and the government's timetable to scrap it will give companies little time to prepare," said John Cridland, CBI Deputy Director-General."Scrapping the DRA will leave a vacuum, and raise a large number of complex legal and employment questions, which the government has not yet addressed. This will create uncertainty among employers and staff, who do not know where they stand. There will need to be more than a code of practice to address these practical issues; we will need changes in the law to deal more effectively with difficult employment situations."The government hopes the change will encourage people to work for longer and could ease the strain on public finances as more people continue to pay tax, while at the same time claiming the state pension.Activists have argued it could inject billions of pounds extra into the economy but some employers are worried it will complicate the job of managing a workforce and add to overall costs.