Fergus O'Dowd (Louth, Fine Gael)
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563. To ask the Minister for Social Protection his views on correspondence (details supplied) regarding the restoration of the State transitory pension; and if he will make a statement on the matter. [41467/16]

Leo Varadkar (Dublin West, Fine Gael)
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The Social Welfare and Pensions Act 2011 provided that State pension age will be increased gradually to 68 years. This began in January 2014 with the abolition of the State pension (transition) available from 65 for those who satisfied the qualifying conditions, thereby standardising State pension age for all at 66 years, which is the current State pension age. This will increase to 67 in 2021 and to 68 in 2028.

In most cases, it is hoped that workers will continue to work up to the new State pension age. Where this is not possible, there are specific measures which apply to someone claiming Jobseeker’s Benefit from a date after their 65th birthday. Where qualified, these recipients may continue to be eligible for that payment until reaching pension age.

Reversing this measure would have a significant Exchequer cost. In 2013, the cost of the State pension (transition) was €137 million. Its abolition was not expected to save that amount of expenditure in full, as some people who were affected would alternatively claim working age payments such as Jobseeker's Benefit (albeit at a lower rate than the rate of the State pension), or may claim an Increase for a Qualified Adult in respect of their spouse’s pension. However, it is anticipated that well over half of that cost has been saved each year as a result of this measure, and this would be expected to increase as (a) the number of 65 year olds increases, (b) the change results in a higher percentage of people working while aged 65, and (c) there have been two Budget increases in the rate of the State pension since then. It is estimated that the net saving in 2017 is likely to be in the region of €80 million, and this is expected to increase over time.

Each year more people are living to pension age and living longer in retirement. As a result of this demographic change, the number of State pension recipients is increasing year on year. This has significant implications for the future costs of State pension provision which are currently increasing by close to €1 billion every 5 years. The purpose of changes to the State pension age is to make the pension system more sustainable in the context of increasing life expectancy. This sustainability is vital, if the current workers, who fund State pension payments through their PRSI, are to receive a pension themselves when they reach retirement age.

The Deputy should note that there is no legally mandated 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. While such a contract may have been entered into with a retirement date of 65, in the context of the previous State pension arrangements, there is no legal impediment to the employer and employee agreeing to increase the duration of employment for one or more years, if both parties wish to do so.

The Department of Public Expenditure & Reform is responsible for the terms and conditions of employment and pensions of public servants, including the age at which they may be required to retire. An interdepartmental group on fuller working lives was chaired last year by that department to consider policy around retirement age in both the public and private sectors and it reported in August. Any question regarding the work of that group, and the retirement age of public servants, may be addressed to the Minister for Public Expenditure & Reform.

I hope this clarifies the matter for the Deputy.