Saturday 17 August 2019

Hike in pension age to 68 is a case of 'too far, too fast' - Ictu

Criticism: The union has called for a reversal of changes which mean that after 2028 a worker will not qualify for the State pension of almost €13,000 until the age of 68. Stock picture
Criticism: The union has called for a reversal of changes which mean that after 2028 a worker will not qualify for the State pension of almost €13,000 until the age of 68. Stock picture
Stock image

Anne-Marie Walsh

The Government has been accused of "going too far, too fast" by hiking the age that workers will qualify for the State pension to 68.

In a new report, the Irish Congress of Trade Unions (Ictu) gives a damning indictment of the policy and calls on the coalition to reverse its decision.

The changes mean workers will not qualify for the state pension - almost €13,000 a year - until they are 67 from 2021. In 2028, they will not be eligible until they are 68.

Ictu's executive council report says it is particularly concerned about those who are unfit or financially compelled to continue working beyond 65 due to increases in the qualifying age.

The report, published ahead of the opening of its biennial delegate conference in Dublin today, notes that less than half of all workers have a pension to supplement their State pension. But some 90pc of public sector workers do, compared with just 35pc of private sector workers.

"While increases in the pension age are taking place in many countries, Ireland is currently on course to have the highest pension age in the OECD in 2028," it says.

However, it said we currently have the second lowest pensioner to worker dependency ratio in the EU27.

This means there are more workers to support pensioners through their taxes than most EU countries.

However, the Government's 'Roadmap for Pensions Reform' predicts the number of pensioners will more than double and the ratio of workers to pensioners fall to just two to one in the next 40 years.

"Congress has been firm in our position that government is going too far, too fast and needs to reverse its decision to implement increases to the pension age," said the report.

The report notes that the Government is reviewing the cost of pension tax relief on workers' social insurance contributions to the Exchequer.

It warns of its "grave concern" that staff on wages worth just three-quarters of average pay or above may be hit by the cuts.

This is because those with yearly wages of more than €35,300 get relief at the higher 40pc tax rate.

But Ictu points out that a full-time worker's average earnings are €45,611 - more than €10,000 higher.

There were 717,300 workers claiming pension tax relief in 2015, the latest year for which figures are available.

"The average annual earnings were €45,611 for a full time worker," said the report.

"Any reduction in the rating of tax relief would adversely affect every worker earning above three quarters of the average wage, which is a matter of grave concern for congress."

It backed the Government's proposed new auto-enrolment scheme that will mean workers without a pension will become members.

But it said it rejects a number of the proposed features of the plan and is campaigning for amendments.

Overall, it describes the Government's five-year plan for pension reform as "light on detail", although it notes there is a public consultation underway.

The report also notes that the self-employed are now eligible for benefits including the dole, paternity and parental leave without suffering a hike in their PRSI contributions.

The self-employed pay a 4pc PRSI contribution rate compared to 14.95pc paid for PAYE workers, it said.

Meanwhile, the report reveals Ictu gets €900,000 a year from the Department of Business, Enterprise and Innovation. Affiliation fees made up most of its income at €2.3m last year.

Irish Independent

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