More than half of businesses want to see the default retirement age brought back as they fear they will otherwise lose their best, younger members of staff amid a lack of promotion opportunities.

Some 54pc of firms would welcome the ability to retire staff automatically once they reach a certain age; a legal right which was removed in April 2011 in an attempt to stamp out age discrimination.

Of those businesses that want to see the retirement age reintroduced, 60pc said they would set it between 61 and 65, while a quarter said it should be between 66 and 70, the study of 421 organisations, seen by Telegraph Jobs, revealed.

Before the Government scrapped the default retirement age of 65 last year, there had been speculation that it would be increased to around 70, to allow for changes in the workplace which have seen more people work into their late sixties.

However, ministers said they would end the “discrimination” of the retirement age altogether, in a move welcomed by personnel groups.

Longer working is widely seen as necessary to keep income tax receipts up and reduce the burden on pension funds as Britain’s population ages.

Over a third of workers polled recently by insurer Canada Life Group said they would probably work past 65 to reflect.

But more people staying on at work for longer is causing a bottleneck at the lower end of the career ladder, with young people missing out on promotion opportunities because their older colleagues are not moving on.

Under the new rules, companies can still justify having a retirement age – a common example is crane operators needing to retire at a certain age for safety reasons – but many firms appear reluctant to bother with the paperwork.

Mr Flanagan said: “Given the choice most companies would rather have a retirement age, more significantly, firms are not willing to take what they perceive as a risk and attempt to legally justify a retirement age.”

Other survey findings showed almost two thirds of organisations operated a default retirement age before being forced to scrap it, while one in five firms said they still expect people to retire at a certain age.

Separate research earlier this year showed only one in three pensioners stop working aged 65, because they cannot afford to give up their jobs. The study by research group Mintel showed just one in eight people had retired last year because they could afford to.

Joanne Segars, the chief executive of the National Association of Pension Funds (NAPF), which represents pension companies, said many people reach retirement age and realise that they simply cannot afford to stop working.

“Sadly many people are finding their retirement plans turn out to be a mirage. They get near, realise they can’t afford it, and see the day when they’ll stop working slip further into the distance,” she said. The value of pensions has been squeezed by the ongoing economic slowdown.

Article from The Telegraph