Employers are embracing the removal of the default retirement age (DRA) but the majority are unaware of the opt-out for group risk benefits.
Only a minority of bosses are concerned about the effects on absence costs and employee health with some believing the move will help with retaining key members of staff.
According to the survey by Group Risk Development (Grid), bosses have accepted the removal of the DRA with a quarter (23%) suggesting it enabled them to retain the best talent within the business.
One in ten (12%) said it would increase diversity in the workplace while a further 19% said they had already encouraged staff to work beyond retirement age before the DRA was removed.
However, more than half (57%) of the 500 respondents were unaware of the exemption for the group risk industry which can help keep overall protection costs down and give businesses more flexibility to retain benefits.
But it appears employers are largely unconcerned with the potential health effects and costs of their older workforce.
Just 17% of companies were worried about their older workers being fit and able to do the job, while 11% believe it will drive up sickness absence costs with a knock on impact for the whole team.
A further 8% said they were worried about managing the capability process (performance management and appraisals) fairly.
Katharine Moxham, spokesperson for Grid, was encouraged by the results showing that employers recognised the benefits of an "ageless" workforce.
"However, as our survey demonstrates, one potential bone of contention is absence management," she said.
"Put simply, businesses fear that older workers are more likely to be sick than their younger colleagues and will have less incentive to return to work.
"It's for this reason that the group risk industry worked with government to ensure that businesses can take the same practical approach as the State does with working age benefits (which cease at state pension age).
"For those employers who choose to continue benefits to their staff beyond age 65, group risk providers can be flexible in accommodating a range of upper ages or other solutions - such as a limited payment period under a group income protection policy.
"By allowing employers choice in their approach, the government has ensured that group risk protection benefits will remain affordable and available to the majority of those employees who most need them," she added.
