Tuesday 12 December 2017

Retirees to take €12,000 hit with age increase

Charlie Weston Personal Finance Editor

PLANS to increase the retirement age to 66 in 2014 will mean 14,000 people losing out on €12,000 a year in state pension payments.

The Irish Association of Pension Funds (IAPF) has called on the Government to clarify what will be put in place for these people who turn 65 in 2014.

The change will mean some people will end up retiring but will have no pension.

People born between January and December 1949 will reach the age of 64 in two years' time. But the qualification age for the state pension will go to 66.

Director of the IAPF Jerry Moriarty said this would mean that these people would lose out on €12,000 in State pension payments.

But people who are just a few months older would get the non-contributory state pension.

Guidance

"These payments are not being deferred, they are being withheld and ultimately these would-be pensioners will never make up for that.

"There has been little in the way of guidance or policy on the matter from the Department of Social Protection and we are now calling on the Government to work with the representative bodies to come up with a series of guidelines for employers and information on alternatives for individuals nearing retirement."

Mr Moriarty said the alternatives could include a slightly reduced pension for those who need to take it at 65 which would seem preferable to going through the charade of applying for Jobseekers' allowance".

Ireland isn't the only country raising its retirement age -- the UK pension age will jump from 65 to 68 by 2020, while Australia, the US and Germany are all set to increase their pension age to 67 over the coming years.

The IAPF chief executive said greater life expectancy meant it was logical to move retirement out as we live longer.

But the practicalities of implementing this change are set to be stark for the first 14,000 people that will be affected, he said.

"It will invariably mean that anyone planning to retire in 2014 will receive one year's less state pension than those slightly older, even though they'll still have worked their 40 years," he added.

The pensions body, which represents trustees for funds, said there was a dearth of information on how employers and individuals should plan for this potential income gap.

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