People could retire at 65 with 45-year record of PRSI payments
The Oireachtas Social Protection Committee heard from members of the Pensions Commission that there should also be a piece of legislation that allows but does not compel someone to stay in employment until they reach State retirement age
A person would still be able to retire at 65 and receive a full pension provided they have a total contributions record of 45 years, under proposals before the Government.
The Oireachtas Social Protection Committee heard from members of the Pensions Commission today whose report, published last month, said the current State Pension is not sustainable in its current form and changes are needed.
The report recommended a gradual increase in the State Pension age from 2028 onwards. It would increase by three months each year, reaching 67 in 2031. It would increase a further three months every two years from 2033, reaching 68 in 2039.
Alongside this, it recommended that that PRSI for self-employed people increase over time, as should PRSI for employers and employees, alongside contributions from the Exchequer.
Roma Burke, chairperson of the technical subgroup on the Pensions Commission, told the committee that currently there are 4.5 working-age people to every older person.
However, by 2050 it is estimated that will drop to 2.3 working-age people per older person.
She characterised that as a “big challenge” that would require the use of “big levers” to address.
Ms Burke said factors that could alleviate the hole in the pension pot, such as inward migration and fertility, would not go far enough to plug the gap.
She said the increase in State pension age would reduce the deficit of €13.35 billion by 2050 by €3.8 bn.
Pensions Commission chairperson Josephine Feehily told the committee that the issue of retirement age in employment contracts should be addressed by the Government.
“There should be a piece of legislation that allows but does not compel someone to stay in employment until they reach State retirement age,” she said.
Despite the rising retirement age recommended by the commission, Ms Feehily said there is merit in allowing those who choose to retire at 65 to receive a pension if they have a “very long record” of contributing for 45 years.
She added that it would be beneficial that workers were given clear indications on a regular basis of when they can expect to receive a State pension, and the contributions they’d made to date, to give them clarity what they can expect to receive when they retire.
Department of Social Protection assistant secretary Tim Duggan told the committee that the minister intends to bring her response to the report in March 2022.
