Pension age to increase to 68 under new plans

The pension age will begin rising in 2028 before reaching 67 in 2031.

Heather Humphreys, the social protection minister, brought the findings of the pension commission report — which suggests raising the pension age by three months every year from 2028 — to Cabinet.

The report also says that a gradual rise in the age to 68 should occur up to 2039.

The Government has agreed that the report will be sent to the joint Oireachtas committee on social protection to seek its views on the recommendations.

Ms Humphreys said the current pensions system is not fit for purpose and needs a radical overhaul.

However, she denied that the slow pace of change — the first increase from the current age of 66 will not happen for seven years — was kicking the can down the road.

“There’s a lot of things that we do have to consider, and I think it deserves the time, because this is going to impact on every single person in this country, whether you’re old or young,” she said.

Speaking at Government Buildings, Ms Humphreys laid out the stark realities of the problems facing the pensions programme.

Currently, there are about four-and-a-half people of working age to support each person aged 65 and over. This number is expected to fall to just over two by 2050.

Ms Humphries said the social insurance fund had a shortfall of €2.3bn in 2020 but that this will be €21bn by 2070.

By 2041, state pension expenditure alone will equate to the entire social insurance fund receipt.

Ms Humphreys also indicated that those who work longer may end up with larger pension payments.

“If they wanted to work on to maybe age 70 and then get their pension at that stage, there would be an actual actuarial assessment and they would probably end up getting a bit more.

“People could also choose to continue to make social insurance contributions past their pension age to improve their standard pension entitlement, so they can work a bit longer, so they’d have more contributions to have a better pension.”

Chair of the pensions commission Josephine Feehily and the members submitted their final report to the minister last month, with the document running to hundreds of pages.

Ms Humphreys said that the report also recommends changes for the entitlement of carers and to align contract retirement ages with the State pension.

Ms Feehily said: “Irish people are living longer and staying well and healthy for longer which is really good news.

“It presents great opportunities but also a big challenge for all of us: How to make sure that the state pension continues to prevent poverty when there are many more people drawing it for many more years?

“The commission considers that it would be a strategic risk not to plan and provide for this known issue.

“The commission has made several recommendations in this report to shore up the fiscal sustainability of the state pension system based on the values of social solidarity.”