Poverty fears over pushing pension age to 70

The push to increase the eligibility age for the state pension to 70 is gaining ground despite fears it will force older people into poverty if they can’t keep working the extra years.

Poverty fears over pushing pension age to 70

The Government-funded think-tank, the Economic and Social Research Institute (ESRI), has strength-ened its view that one of the ways to deal with the growing costs of the ageing population is to make people work longer.

Currently, workers have to wait until they are 66 before they can claim the pension. That’s despite many being forced to retire at 65 — the statutory retirement age in the public sector which is traditionally matched in many private industries.

The increase to 66, which came into effect in 2014, led to an anomaly where retirees have to claim a jobseeker’s payment for the year. Further difficulties are anticipated when the pension age increases to 67 in four years’ time and to 68 in 2028.

Taoiseach Leo Varadkar admitted earlier this year that these are anomalies that should have been sorted out at the time the changes to pension age were agreed. But now proposals to push out the pensionable age further to 70 are under increasingly serious consideration.

An ESRI research paper in the summer examined the likely impact of increasing the statutory retirement age from 65 to 70. “A retirement age reform that increases the current statutory retirement age by five years, roughly corresponding to the projected increase in life expectancy, could more than offset the impact of demographic change on fiscal balances,” it states.

That position was firmed up in a presentation for the Oireachtas committee on budgetary oversight which yesterday began examining potential measures that may be introduced in next month’s budget.

The ESRI said: “The costs of population ageing could be offset by fully extending the pension age to 70.”

Such a move would be financially attractive to the Government. Social Protection Minister Regina Doherty told the Dáil before the summer recess that the growth in the number of people aged over 66 would push the annual €7.3bn state pensions bill up by €220m this year, with further annual increases to follow.

The proposal to extend working years and push out pension eligibility age echoes a debate that is going on in many developed countries, including the UK.

Positive ageing charity Age Action warned that while many older people were able and keen to keep working, others could be left in serious difficulties.

Justin Moran, head of advocacy and communications, said: “Not everyone works in an office. Forcing workers in physically demanding jobs like construction, agriculture, or healthcare to keep working as they age has serious health implications.

“The overwhelming majority of us are going to rely on the state pension in retirement. We need to ensure it is fair and sustainable. But the solution is not simply to keep increasing the pension age.

“We need to abolish mandatory retirement, divert some of the money funding private pension tax breaks into the state pension system, and look at increasing social insurance contributions.”

Any proposal to increase the retirement and/or pension age creates challenges for maintaining and finding work as employers appear reluctant to extend workers’ contracts beyond the age of 65. Employers group Ibec said it is examining the issue and its implications.

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