Prepare to work until you are 70: rise in age for the State pension on cards
PEOPLE should not get the State pension until they reach the age of 70, a State-supported think tank has recommended.
Moving the statutory retirement age to 70 would counteract a fall in the workforce and the rise in the number of pensioners, the Economic and Social Research Institute (ESRI) said.
The analysis says that retirement age reform that increases the current statutory age by five years roughly corresponds to the projected increase in life expectancy.
Raising the pension age, the study finds, could more than offset the impact of demographic change on the State budgets.
It comes after reports this week that Social Protection Minister Regina Doherty has been warned of a pensions “time-bomb”, with the State’s bill spiralling by €1bn every five years due to our ageing population.
The Government has said it hopes to be able to give a rise in the State pension that exceeds the rate of inflation in this year’s Budget, while Fianna Fáil is also pressing for increases.
But Ms Doherty’s officials have warned pensions account for the single largest block of the department’s expenditure at €7.2bn this year.
Getting rid of the mandatory pension age of 65 is something that was backed by the Citizens’ Assembly last weekend.
The ESRI paper by Dr Karina Doorley found that countries all over Europe are struggling with the cost of ageing populations.
“A shrinking labour force, combined with a growing old age dependency ratio, is expected to reduce tax revenues and raise pension expenditures in the future,” she wrote in an academic paper.
She noted that demographic change meant Ireland could expect its workforce to get older, although it will also be more skilled.
The latest Census figures show that the over-65 age group saw the largest increase in population since 2011, rising by more than 100,000 to close to 640,000.
Dr Doorley said there was a need to raise the statutory retirement age to 70 across Europe.
“The analysis also shows that a retirement age reform that increases the current statutory retirement age by five years in each European country, roughly corresponding to the projected increase in life expectancy, could more than offset the impact of demographic change on fiscal balances,” she said.
The State pension age has already been raised.
Since 2013, the minimum retirement age for the State pension scheme is 66. It is rising to 68 in 2028.
The Citizens’ Assembly recommended last weekend the abolition of the mandatory retirement age.
This is where people are forced to retire at the age of 65, yet do not qualify for the State pension until at least a year later.
The assembly also wants some form of compulsory supplementary pension scheme for the roughly one million workers who will only have the State pension when they retire.