BUSINESSES have given a cautious welcome to plans to give people the right to carry on working once they hit 65.

The Government announced yesterday it plans to phase out the default retirement age by October 2011.

It is also reviewing when the state pension should rise to 66 in a bid to cope with a population that has an increasing proportion of older people, living longer, healthier lives.

Norman Smith, chairman of Castle Point Business Forum and managing director of Canvey firm UK Shelving, said: “My personal viewpoint is that it should be down to the wishes of the individuals, especially with pensions being in the state they are. But from a business viewpoint it is easier if you know people will retire at 65 and, with health and safety so prevalent, you have got to start considering if people are able to do certain jobs at a certain age.

“There is also a concern that there will be fewer jobs for younger people.”

Iain Wicks, chairman of the Essex Federation of Small Businesses, warned small businesses should be protected from possible expensive legal proceedings.

He said: “Businesses need to be able to make decisions about their workforce without the threat of expensive tribunals from employees who are unable to work because of age-related issues.

“The ability to let someone go because of ill-health should be made sacrosanct for those employers.”

Mo Larkin, chairman of the Basildon Age Concern, also urged caution.

She said: “It’s a good thing, as work can keep people motivated and the money most pensioners have to live on is not very much, so it is a help in that way, but it should not be mandatory.”