The government has backed down on plans to limit age discrimination by extending employers’ rights for a maximum retirement age for their staff.

Employers will now be able to continue retiring employees at 65, on condition that they consider applications for them to work longer.

Staff applications to continue working can be rejected by the employer if there is a good business reason.

The decision comes after almost two years of consulatation on the issue.

Back in 2002, the Department for Trade and Industry had then insisted that retirement ages would be scrapped altogether by 2006.

Patricia Hewitt, the Secretary of State for Trade and Industry said: “We have listened to strong representations arguing that many companies still rely on default age for business planning purposes.

“There is a danger that without one, there could be adverse consequences for occupational schemes and other work-related benefits.”

The new rules are set to be enforced in 2010.