Less than a third of British employers still require employees to leave on their 65th birthday, The Daily Telegraph reported Thursday.
Critics of the decision to scrap mandatory retirement age argue it will reduce an employer's flexibility in hiring but supporters hail the decision.
"Older workers have a lot to offer in the workplace and it's time we got rid of this outdated form of age discrimination," said Liberal Democrat Minister Ed Davey. "We will do all we can to support businesses with the change."
The new rule will be phased in gradually, starting in April. Britain also raised its retirement age to 66 and companies will be required to automatically enroll their workers in pension plans.
That move is expected to force employers to reduce contributions for existing members, some officials said.
Pensions expert David Robertson said research indicated many large companies were considering reducing their contributions in response to automatic enrollment.
"A lot of big firms are looking at leveling down their contributions because they are looking at paying contributions for a lot more employees," said Robertson of the Association of Consulting Actuaries.