This means that employers will no longer be allowed to dismiss staff when they turn 65.
From 6 April, businesses will not be able to issue any notifications for compulsory retirement using the DRA procedure.
Between 6 April and 1 October, only people who were notified of their retirement before 6 April and whose retirement date falls before 1 October can be compulsorily retired using DRA.
After 1 October, employers will be unable to use DRA to retire their staff.
John Cridland, CBI director general, says the government’s decision does not leave enough time for businesses to put new procedures in place.
‘Employers accept that more people will want to work beyond 65 as the population ages, but the government has not recognised the fundamental question, which is how should employers manage retirement on the basis of a performance appraisal,’ he says.
He adds that the problem will be more acute in physically demanding jobs.
However, Jane Mulford, pension specialist at NFU Mutual, supports the decision to scrap the DRA, which she says allows greater financial flexibility.
‘Older workers who are in good health and want to work for longer will be able to continue to contribute to pensions and retirement savings, helping them to maintain a similar standard of living in later years,’ she claims.