Written answers

Wednesday, 26 July 2017

Department of Employment Affairs and Social Protection

Pension Provisions

Photo of Danny Healy-RaeDanny Healy-Rae (Kerry, Independent)
Link to this: Individually | In context | Oireachtas source

1528. To ask the Minister for Employment Affairs and Social Protection the way in which the Government will resolve the impact the new retirement age of 68 years of age will have on persons and businesses that had not anticipated this (details supplied); and if she will make a statement on the matter. [35909/17]

Photo of Regina DohertyRegina Doherty (Meath East, Fine Gael)
Link to this: Individually | In context | Oireachtas source

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.

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. It is the case, therefore, that there will have been 17 years notice between the passing of this legislation and the increase of the pension age to 68.

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, and demographic change alone is expected to increase spending on pensions by over €220 million this year, not including the impact of rate increases.

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.

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 on a Pay-As-You-Go basis, are to receive a pension themselves when they reach retirement age. Rowing back on these changes, which have already been legislated for, would undermine that sustainability, to the detriment of current workers.

It should also be borne in mind that these changes are modest in the context of increasing longevity among older people, and the duration of the average pension is still expected to increase based on current trends.

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.

I hope this clarifies the matter for the Deputy.

Comments

No comments

Log in or join to post a public comment.