The Women and Equalities Select Committee has called on the government to do more to help older workers stay in work for longer, including introducing flexible working.
The MPs found discrimination was the "root cause" of the challenges faced by older people overlooked for employment opportunities in the UK.
In a report released today (17 July) the committee identified more than one million people aged 50+ who were out of work, but willing to work if the opportunity arose.
The report attributed this state of affairs to current barriers of discrimination, bias and outdated employment practices and urged the government to do more to recruit and retain the experienced and skilled older workforce.
The committee expressed a need for the government and the equality and human rights commission (EHRC) to be clearer that prejudice, unconscious bias and causal ageism in the workplace are unlawful.
It should take active steps towards accommodating an ageing workforce with flexible working and mid-life career reviews as standard, it said.
The report highlighted older women as a demographic at particular risk of suffering discrimination and a lack of flexibility in the employment market, given they provide much of the informal care in society and are still financially affected by past and present gender pay gaps.
Ros Altmann, former UK minister of state for pensions, said these factors mean older women excluded from the world of work face poverty as the state pension age rises.
She said: "Increasing numbers of older people - especially women - want or need to work longer as state pension age is rising and traditional pensions are receding. If these workers are just written off by employers, then they will lose the opportunity to improve their later life.
"More older women than ever before tend to be single, and cannot rely on a partner to support them in later life. So, staying in work is often vital to help them avoid poverty in old age."
Ms Altmann said the current situation represented a waste of resources, and with an aging population and lower immigration, making the most of home-grown talent was increasingly important.
She said: "Employers can help by ensuring their recruitment processes are genuinely age-blind. They can also ensure their older staff are re-skilled, perhaps offering ongoing training, lifelong re-skilling and mid-life career reviews."
Brian Beach, senior research fellow at International Longevity Centre-UK, who gave evidence to the committee in its research, emphasised it was crucial employers understood what ageism really was.
He said: "We support the committee’s call for stronger, clearer action by government and EHRC to address this issue, however the role of employers remains crucial, and part of the problem stems from a lack of awareness of what ageism really is.
"Our report ‘Exploring Retirement Transitions’ highlighted that employers are aware of age discrimination legislation, yet some line managers are scared to talk to people about their retirement plans for fear of being accused of ageism - which is unhelpful for both employer and employee."
