The government has launched a scheme to encourage employers to keep older workers in jobs for longer.

It claims that the economy could be boosted by £18 billion if the employment gap between people in their 40s and those aged 50 to the state pension age was halved.

Pensions minister Steve Webb said: “Older workers have a huge amount to bring to any workforce and are a vast untapped talent.

“We are living longer and can expect many more years of healthy life. It’s great news – but it’s something that as a society and as an economy we need to respond to.

He added: “The business case is compelling and the research we are launching today sets out clearly the advantages for individuals, employers and the state.”

The scheme will extend the right to request flexible working to all employees in June and a new Older Workers’ Employment Champion will be appointed to help promote the cause.

There will also be a new Health and Work Service giving workers with health problems support to return to work.

According to Office for National Statistics estimates, in the next 10 years there will be 700,000 fewer people aged 16 to 49 but 3.7 million more people aged between 50 and State Pension age.