New legislation will be passed to prevent employers from being able to force staff to retire at the age of 65.
The move, which will commence in October, was declared as being “great news” for older people, the economy and business in general.
The move was first touted in July and has now been confirmed after a consultation process.
It now means that employers will not be able to issue notifications of compulsory retirement.
Employment minister Ed Davey said: “I’m afraid those people who seem to think there is a displacement between young and older people here firstly are not reading the evidence and secondly they have a very old fashioned approach to labour supply as though there is a fixed amount of jobs in the economy. That clearly isn’t the case … this will actually boost the number of jobs in the economy.”