Mary Butler (Waterford, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

478. To ask the Minister for Social Protection if he will consider lowering the starting age of the State pension to 65 years of age to put it in line with the general age of retirement; if he accepts the unfairness of a person who has worked all their life and has paid full contributions should not have to claim jobseeker's allowance; and if he will make a statement on the matter. [13171/16]

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Social Welfare and Pensions Act 2011 provided for increases in the State pension age over a period of years. This process began in January 2014 with the abolition of the State pension (transition) previously available at 65, thereby currently standardising State pension age for all at 66 years. The changes introduced in 2011 were on foot of a Government commitment included in the National Recovery Plan published in 2010 and in the subsequent Memorandum of Understanding with the EU/ECB/IMF.

The purpose of these changes is to make the pension system sustainable in the context of increasing life expectancy. More people are living to pension age and living longer in retirement. Therefore, the duration for which an average pension will be paid will continue to increase. The number of pensions is increasing by approximately 17,000 annually as a result of this demographic change. This has significant implications for the future costs of State pension provision, resulting in an additional cost of some €1 billion every 5 years, before other matters, such as rate increases, are factored in.

In 2013, the cost of the State pension (transition) was €137 million. While its abolition would not realise that saving in full, as some people who were affected would alternatively claim working age payments such as Jobseekers Benefit (although at a lower rate than that of the State pension), and some may have claimed for Qualified Adults on their spouse’s pension, it is estimated that well over half of that cost may have been saved each year as a result of this measure.

The Deputy should note that there is no general retirement age in the State, and the age at which employees retire is a matter for the contract of employment between them and their employers. I would encourage employers, where possible, to recognise the contribution that older workers make to their businesses, and not to automatically end their employment on their 65th birthday, particularly given the fact that the State pension age is now 66.

In terms of financial supports, social welfare benefits will continue to be available up to the age of 66 for those who are contractually obliged to leave employment. People who have worked in the private sector until their 65th birthday will generally qualify for Jobseekers benefit (which is not means-tested) rather than Jobseekers allowance, if they are unemployed and seeking work.

Jobseekers whose benefit expires in their 65th year will continue to be paid benefit up until the age of 66. Where a jobseeker’s benefit claim spans two benefit years, a new Governing Contribution Year requirement is not applied to the second benefit year of a claimant aged 65 (effectively this means that they may receive payment in both years based upon eligibility in the first year).

There are no plans to introduce legislation to change from the current position, as doing so would result in a significant cost to the Exchequer and further undermine the sustainability of the pension system, which already faces significant demographic challenges.

I hope this clarifies the matter for the Deputy.