Mr. Michael Taft:

I thank the committee for the invitation to present our perspective on the recommendations of the Commission on Pensions. Myself and Ms Ryan will be in a position to take questions afterwards.

SIPTU launched the STOP67 campaign because of widespread concern among our members at the prospect at that time of the pension age being increased to 67 years at the beginning of this year. For the purposes of this, our opening statement will address two areas. The first is the fiscal arguments underpinning the commission’s recommendation to increase the pension age. Everyone accepts pension expenditure will increase in the future. However, increasing the pension age will save little money and will be an ineffective tool in ensuring pension sustainability. The commission relied on models developed by the Department of Finance and the Irish Fiscal Advisory Council, IFAC, to estimate savings from increasing the pension age. Both these models showed that by 2050 the savings would be fractional, that is, less than 1% of national income. While in nominal terms this is not insignificant, both models showed increasing the pension age would only save between 10% to 15% of the estimated overall increase in pension expenditure. However, the Department of Social Protection produced data that suggests that these models may considerably overestimate the savings from increasing the pension age. The reason for the discrepancy appears to be that the Department of Finance and IFAC estimated the impact on pension expenditure but did not factor in offsetting costs such as other social insurance payments, including the new benefits payment for those aged over 65. The Department of Social Protection figures did factor in these costs. That may explain the considerable discrepancy between the two. Although SIPTU referred to this in its submission to the commission, unfortunately the commission did not refer at all to the Department of Social Protection’s data. This led the ICTU nominee to the commission, Ms Ethel Buckley, deputy general secretary of SIPTU, to oppose the recommended pension age increase. She was the only commission member to do so.

I now turn to the second issue of mandatory retirement before State pension age. A key component in moving to a flexible pension system involves the introduction of a statutory right to remain in work at least up to the State pension age and potentially for years afterwards. The increase in the State pension age has deepened the hardship felt by workers forced to retire from their employment at an age before which the State pension becomes payable. Many workers, although not all, will wish to remain in their employment until their pension becomes payable due to their continued ability to do their job and the fact that they will see a significant drop in their income if forced to retire. Addressing this issue requires legislative change.

The Employment Equality Acts, 1998 to 2015, state that an employer cannot discriminate against a worker on the grounds of age. The Act allows, but does not require, employers to set a mandatory retirement age for workers, provided it can be justified on objective grounds. It is the law that must be justified rather than the decisions of individual employers. However, there have never been any national employment policies, labour market requirements or social policy objectives set out by the Government on the imposition of a workplace retirement age under the Employment Equality Act, as required by European law. SIPTU welcomes the Commission on Pensions recommendations for legislative change that allows but does not compel an employee to stay in employment until State pension age and calls for this change to be addressed by means of an amendment to the Employment Equality Act. This recommendation is in line with SIPTU’s submission, which called for a flexible pension age regime that exists in many other EU countries.

The commission further recommended the Government consider allowing people with long contribution records to access their State pension entitlements at age 65 years. We welcome this first step towards greater flexibility but would urge the committee to consider in its analysis decoupling this recommendation from the pension age increase and consider more flexible options such as accessing pension entitlements at an earlier age, especially for those in arduous and-or hazardous occupations.

The commission failed to construct a consensus among all stakeholders regarding a credible path to pension sustainability and flexibility, one that will take these issues out of the electoral cycle. In fact, by postponing the increase in the pension age to 2028, it has parachuted the issue into the next general election. The committee has time to address the many defects of the commission report while urging swift action to implement the positive recommendations such as reform of mandatory retirement contracts. The committee could investigate the discrepancies between savings estimates. It can take up the issue of flexibility, especially in arduous occupations. Most of all, it could help initiate an authentic stakeholder forum that would seek a genuine consensus based on best-case evidence.