Workers face fight to remain employed until 66

Employees who want to work on until they are 66 to avoid losing out when the state pension age rises in January face an uphill battle as employers opt to keep the retirement age at 65.

Fewer than one-in-eight employers (11.5%) surveyed say they have increased or abolished their retirement age or that they intend to do so in line with the pension changes, and just over a quarter (26.7%) say they “may” facilitate individual requests to work on.

Workers caught out by the decision to increase the eligibility age for the state pension to 66 as of Jan 1 will have to sign on for jobseeker’s benefit for the first year of retirement if forced to leave work at 65.

That means a loss of €42 a week or €2,200 over the year as jobseeker’s benefit is €188 per week compared to the weekly state pension of €230.30.

Siptu said for workers without a private pension, that drop could cause serious hardship.

Policy analyst Lorraine Mulligan said: “We would be very concerned about the impact this will have on older workers. Through no fault of their own their income will fall and they are effectively being told they do not have the opportunity to work longer.”

The survey, carried out by employers’ group Ibec, also found 50.4% of companies were definitely not changing their retirement policy in line with the changes and 11.4% were still undecided, although with just six weeks to go, change at this stage is thought unlikely.

Loughlin Deegan, senior adviser on employment rights and pensions at Ibec, said firms had compelling reasons for retaining a set retirement age.

“It’s a necessary tool for workforce planning. Employers need to know well in advance how many employees are retiring and when, so they can plan recruitment around that.

“It’s also necessary for promotional planning. It’s important to motivate middle-ranking employees by giving them an opportunity to rise up.”

She said she anticipated it could lead to cases in the Labour Court or Employment Appeals Tribunal, but Mr Deegan said employers were on sound legal ground as the European Court of Justice had found that workplace planning and motivation issues were legitimate labour market objectives.

Thousands of people will be affected by the changes although the exact number is unclear. The Department of Social Protection said 14,400 people became eligible for the pension at 65 last year, but half of them had already left work through illness or other reasons and were on welfare payments that were payable up to 66.

Siptu called for a special payment to be provided for workers caught out in the new year, but the department said existing social welfare supports and conditions would apply.

It acknowledged that part of the reason behind the changes to the state pension was the encouragement of longer working and said an interdepartmental working and retirement group had been set up to consider how this could be achieved.

“Over the coming months it is expected that preliminary proposals, which may encourage participation and retention in the labour market of older workers, will be presented to Government,” said a spokesman.