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Government to keep 'open mind' on committee recommendation to maintain state pension at age 66

An Oireachtas Committee has said the pension age should not be increased.

LAST UPDATE | Feb 2nd 2022, 9:07 PM

THE TAOISEACH HAS said the government will approach “with an open mind” a new Oireachtas Committee recommendation to maintain the state pension age at 66.

The Social Protection Committee has recommended that the state pension should be retained at its current age of 66 and that changes to employers’ PRSI contribution rates should be examined by the Commission on Welfare and Taxation to determine the fairest way to increase the rates.  

It was confirmed in the publication of the Pension Commission report last October that the State pension age will rise by three months each year from 2028 until it hits 67 in 2031. 

One of the recommendations in the Pensions Commission report, which was submitted to Social Protection Minister Heather Humphreys in September, was that the State pension age should rise in quarterly increments to 67 between 2028 and 2031. 

The report also recommended that it should then gradually increase to 68 by 2039.

However, the Social Protection Committee has today recommended that the current pension age of 66 should be retained. 

Speaking in the Dáil today, Taoiseach Micheál Martin said he has not read the Social Protection Committee’s report “in detail”. 

However he added: “I have an open mind, genuinely. The government will approach this with an open mind.”

Trade union SIPTU welcomed the decision, saying that the recommendation on PRSI contributions was “very important”.

“We welcome the recommendation by the Oireachtas Committee on Social Protection that it should remain at 66,” SIPTU Deputy General Secretary Ethel Buckley said in a statement.

“The Committee also recommended an end to mandatory retirement of workers at 65 and we would ask the Minister for Social Protection, Heather Humphreys, to proceed with legislation to provide for this right without delay,” Buckley said.

“The recommendation by the Committee to allow workers with 40 years of PRSI contributions to access their state pension at 65 years is also very important, particularly for men and women in arduous employments.”

Age Action said the recommendations would be a positive step if implemented by the government.

Nat O’Connor, Age Action’s Senior Public Affairs and Policy Specialist, said: “People pay their social insurance on the basis that this will give them an adequate pension income in retirement.”

“The Oireachtas Committee on Social Protection has made thirteen recommendations that would help to ensure Ireland’s pension system is fair, flexible and secure into the future,” O’Connor said.

“The current discussion of hybrid working practices after COVID-19 has opened up new opportunities for better work-life balance alongside higher productivity, while reducing wasted time spent in long commutes.

In a similar way, a national discussion on employing older workers and a better transition from work to retirement would yield economic and social benefits.

“The Oireachtas Committee did identify the challenge of funding an adequate and secure State Pension for all.

“Unfortunately, the terms of reference of the Pensions Commission precluded it from fully exploring what would be an adequate pension to meet the real cost of living.

“Age Action continues to call for the State Pension to be benchmarked against all of the costs associated with older age – for which we need a comprehensive cost of ageing study – and to be indexed against the rising cost of living and average wage increases, so that people in retirement do not fall behind the rest of society.”  

The Committee has published its report in response to the final report published by the Commission on Pensions. 

The report is also being published in response to a request by Humphreys who previously asked the Committee to consider the report and provide its views. 

In total, the Committee has made 13 recommendations in response to the Pension Commission report. 

Along with the retention of the current pension age, the Committee has recommended that legislation should be developed to ban the use of mandatory retirement clauses in existing and new employment contracts. 

The Commission recommended that the cap on credited contributions should be eliminated in view of the importance of nurturing and caring work in our society. 

Speaking at the launch of the report, committee chairperson Denis Naughten said: “The State pension is an important part of Ireland’s social protection measures.”

“It is an acknowledgement of the work people have carried out across society whether in employment, in the home or as a family carer,” he continued.

“It helps to prevent many of those in receipt of the State pension from entering poverty and enjoying a reasonable standard of living.

“However, the provision of the State pension is dependent on the collection of PRSI receipts. As the committee was informed, it is expected that the PRSI base will contract significantly over the coming decades and this will affect the available funding.

“The committee is strongly of the view that the State [ension must be protected and that no further increases to the qualifying age should take place. The Committee held many discussions regarding the development of new funding mechanisms to ensure that the current pension age is maintained.”

The pension age became a major, and rather unexpected, political issue in 2020′s general election after Fianna Fáil promised to postpone the rise to 67.

Speaking on RTE Radio One’s News at One, Minister for Finance Paschal Donohue said that leaving the pension system as it is would “bring costs with it”.

“By 2030 we will be experiencing an annual shortfall each year of €2.3bn in the fund that pays for this,” Donohue said.

“There are a number of options that will be considered but each of these options has consequences, which is why the Government – and the Taoiseach affirmed this in the Dáil earlier on – have the process in place to consider this with the consideration it needs.”

Additional reporting by Lauren Boland

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