Tuesday, 5 December 2017
Department of Employment Affairs and Social Protection
503. To ask the Minister for Employment Affairs and Social Protection if her attention has been drawn to the fact that persons born on or before January 1955 will qualify for a State pension at 66 years of age, whereas those born after January 1955 will receive it at 67 years of age (details supplied); her plans to amend the legislation in this area to stop such discrimination; and if she will make a statement on the matter. [51884/17]
The State pension (transition) SPT was introduced in 1970 when it was known as the retirement pension and was designed to bridge the gap between the standard social welfare pension age, which at that time was 70 years of age, and retirement age. Over time, the age for State pension (contributory) was reduced to 66 years. However, evidence shows that a significant number of people coming on to SPT in 2012 did not come from work as many were already on other social welfare schemes. 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 SPT 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.
We are all aware that people are living for much longer. Life expectancy at birth has increased significantly over the years – and is now at 78.4 years for men and 82.8 years for women. This is very positive. 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 approx. €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.
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 (although at a lower rate than the rate of the State pension), or 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 a number of 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 over €80 million, and this is expected to increase over time.
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.
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.
I note the Deputy’s suggestion that differing State pension ages at different times amounts to discrimination. However, pension systems evolve over time, and people retiring now receive significantly more generous pensions (in real terms) for longer durations than most of the pensions that they financed as workers when paying PRSI and tax.
I hope this clarifies the matter for the Deputy.