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Government criticised for refusing to close the 'pension gap' for older workers

Many workers must retire at 65, but are unable to claim a state pension until the age of 66 – forcing many on the dole.

Finance Minister Michael Noonan (left) and Taoiseach Enda Kenny (right) are 73 and 65 years old respectively. Most workers must retire at 65.
Finance Minister Michael Noonan (left) and Taoiseach Enda Kenny (right) are 73 and 65 years old respectively. Most workers must retire at 65.
Image: Rollingnews.ie

THE GOVERNMENT WANTS to make it easier for older people to work beyond retirement age – but has been criticised for refusing to oblige companies to extend contracts of employment to the age of 66.

Today Paschal Donohoe, the Minister for Public Expenditure and Reform, published the Government’s Fuller Working Lives report.

It commits only to another review of the current situation, whereby many workers must retire at 65, but are unable to claim the state pension until the age of 66 – forcing many on the dole.

Eamon Timmins of Age Action, an advocacy organisation for older people, called the report a missed opportunity.

Every year older workers are forced out of their jobs and onto the dole because of mandatory retirement ages.

“While other countries around the world are abolishing these ageist restrictions and supporting older workers, our members will be very disappointed that there is no plan to do the same here.

There are also no proposals to address the anomaly that workers are facing retirement at the age of 65 but unable to claim the state pension until they turn 66, pushing them onto Jobseeker’s Benefit.

Age Action welcomed proposals for training supports for older people, and “improved awareness” of the advantages of working longer, Timmins added.

“But the government’s strategy commits to removing the barriers to continued employment for older people and this report is a missed opportunity do just that.”

Paschal Minister Paschal Donohoe. Source: Rollingnews.ie

Compulsory retirement age

Expenditure on State pensions and relevant supplementary payments is set to rise from €7 billion in 2016 to €8.7 billion in 2026, assuming no rate changes.

There is no single fixed retirement age for employees, but most employment contracts stipulate a retirement age of 65, leaving many with a ‘pension gap’ before the contributory state pension kicks in.

The compulsory retirement age in the public sector for people who joined it before 1 April 2004 is 65 years, meanwhile.

The minimum retirement age is 65 for people who joined the public service after 1 April 2004. Some occupations – for example, the Gardai, firefighters and the Defence Forces – have provisions for much earlier retirement, however.

The Employment Equality Acts 1998-2011 afford employers a broad discretion in fixing compulsory retirement ages, whether as an express term in an employee’s contract of employment, or as an implied term, or by custom and practice.

In 2021, the eligibility for the state pension will rise from 66 to 67 (and 68 in 2028).

The United Kingdom and United States have already outlawed compulsory retirement ages.

shutterstock_462670591 Arsenal manager Arsene Wenger is 66 years of age. Source: Shutterstock

Cultural norms

Minister Donohoe said the report, which recommended a shift in cultural norms around retirement age, was “an important piece of work”, but said a policy framework needed to be formulated.

“People are, thankfully, living longer and healthier lives and this trend will continue into the future,” he said.

An ageing population does creates challenges as well as opportunities that need to be explored.

“We need a policy framework to support those who want to continue to make an active contribution throughout their lives, including through work.”

The report

The report recommends:

  • review of the current statutory and operational considerations giving rise to barriers to extended participation in the public service workforce, “including the current and planned age of entitlement” to the state pension.
  • code of practice to be prepared by the Workplace Relations Commission to set out best industrial relations in managing requests to work beyond retirement age.
  • Employers should clearly state their policy on retirement age.
  • Guidance material to be provided to employers on the use of fixed-term contracts beyond normal retirement age.
  • Training for older workers.

shutterstock_386081320 Two older people at work. Source: Shutterstock

Read: Dáil to hear another attempt to end compulsory retirement age

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