Little impact on numbers giving up work from delaying the State pension
DELAYING the payment of the State pension to the age of 66 had little impact on the number of people who decide to give up work, a study by the Economic and Social Research Institute has found.
And there is no evidence that moving the retirement age had any impact on employment and unemployment levels for 65 year olds.
The Government had hoped people would stay in the workforce longer, saving it money on the State pension, when it moved the mandatory retirement at to 66.
From January 2014, the qualifying age for the Irish state pension increased from 65 to 66 years. People born after January 1, 1949, could no longer qualify for the pension at age 65. This date become the cut-off date.
Individuals born before this date could still qualify, provided they had the required social insurance contributions.
Researchers at the ESRI found there is no clear evidence that the change in the pension age impacted the retirement rate of those born after the cut-off point.
The retirement rate for those who missed out on getting the State pension from the age of 65 was the same as for those who just made the deadline to qualify for it.
One of the reasons for this is that those who lost out tried to make up the financial shortfall by getting Jobseeker’s Benefit.
This was a "type of de facto pension payment until they reached the age of 66" according to researchers Paul Redmond, Seamus McGuinness and Elish Kelly.
"This is likely to have lessened the impact of the change on those born just after the cut-off point," they state.
And a number of employers continue to specify a retirement age of 65 for retirement and pay out on an occupational pension from this age.
"The existence of occupational pensions could limit the impact of the policy on retirement decisions, as individuals with such incomes could still choose to retire at 65 irrespective of the policy change," study states.
It was funded by the Department of Social Protection.
Research officer at the ESRI Paul Redmond said the rising cost of State pensions and the fact that the population is ageing means the age at which people retire is increasingly important for public policy.
"We have not found evidence of people reacting to the policy change in 2014.
"However, the analysis highlighted the need for improved data that allows us to fully identify an individual’s precise age, social insurance contribution history and private pension income, so that the impacts of future policy changes in this area can be effectively evaluated."
Previous ESRI research warned that the ageing population would put pressure on public expenditure in the years ahead.
It has compiled a report which shows the cost of population ageing could be offset fully by extending the pension age to 70.
The pension age is already set to rise from 66 to 68 over the next decade.
The economic think-tank says the measure needs to form part of plans to cope with our ageing population.