Sandra McLellan (Cork East, Sinn Fein)
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Question 48: To ask the Minister for Social Protection her views that her decision to raise the age for the State pension will disproportionately affect those on low and irregular income who do not have access to a private or occupational pension or savings. [10444/11]

Joan Burton (Dublin West, Labour)
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The challenges facing the Irish pension system are significant. In particular, the task of financing increasing pension spending will fall to a diminishing share of the population. There are currently six workers for every pensioner and this ratio is expected to decrease to less than two to one by 2050. Increasing State pension age is one of the ways in which we can sustain the pensions system and also maintain the value of the State pension at 35% of average earnings. Extending State retirement age will also encourage and support those who have private or occupational pensions to remain longer in the workforce. This will improve overall pension sustainability and reduce costs for the employer. People are living longer and healthier lives with average life expectancy set to rise even further in the future, up to 89 years for women and 83 for men. People will still, therefore, be spending at least the same amount of time in retirement as they are today, even with a later State pension age.

Therefore, as announced as part of the National Pensions Framework, State pension age will be increased gradually to 68 years. This will begin in 2014 with the standardisation of the State pension age at 66 and will be increased to 67 years in 2021 and to 68 in 2028. As agreed under the EU/IMF Memorandum of Understanding, these changes will be provided for in legislation by mid 2011.

The aim of the Framework is to deliver security, equity, choice and clarity for the individual, the employer and the State. It also aims to increase pension coverage, particularly among low to middle income groups and includes proposals for an auto enrolment scheme to provide access to private pensions. The Framework also recognises that many people want to have the option to work longer and proposes, for those who wish to postpone drawing down their State pension, to put in place arrangements to enable them to receive an actuarially increased benefit. In addition, for those with contribution shortfalls at pension age, arrangements will be put in place to allow them to receive additional benefits if they continue to make paid contributions for pensions purposes while remaining in work or self- employment. The details and timeframes for these changes are set out in the National Pensions Framework, which was published on 3 March 2010. An implementation group chaired by my Department is developing the legislative, regulatory and administrative infrastructure required to put the necessary reforms into operation.

Given the changes to State pension age and the other proposals in the Framework, both employees and employers must be encouraged to change their attitudes to working longer. In the workplace, employers must seek to retain older employees and create working conditions which will make working longer both attractive and feasible for the older worker. Where this is not possible and people leave paid employment before State pension age, they will be entitled to apply for another social welfare payment until they become eligible for a State pension, as is the current situation.