Friday 19 January 2018

'Retire when you want' revolution

Social Protection Minister Leo Varadkar Photo: Tom Burke
Social Protection Minister Leo Varadkar Photo: Tom Burke
Philip Ryan

Philip Ryan

Workers will be incentivised to remain in their jobs for longer through the promise of a larger State pension under radical Government plans aimed at tackling the pensions time bomb, the Sunday Independent can reveal.

The landmark overhaul of employment law would also for the first time force employers to give workers legitimate reasons for compulsory retirement irrespective of a worker's age.

The far-reaching changes to employment law is top of the agenda for Government discussions in the New Year and would clear the way for workers in both the public and private sector to continue working beyond the general retirement age of 65, if they so choose.

And the proposals would also give employees the option of taking early retirement on a reduced pension.

The measures are aimed at clamping down on age discrimination in the workforce and tackling the rising cost of State pensions which could radically reduce Government spending in the years ahead.

Similar laws introduced in the UK five years ago resulted in widespread debate over the rights of workers and employers. UK employers can only force workers into retirement if they can provide a "public interest" reason for making them leave their jobs.

UK workers can defer their state pension and remain in the workforce longer to receive an increased payment when they retire.

There is no compulsory retirement age in Ireland and people are free to work beyond the age of 65, but many employment contracts in both the public and private sectors require people to retire at a specified age.

Central to the Government's new strategy, which is being drafted by Social Protection Minister Leo Varadkar and Minister of State for Mental Health and Older People Helen McEntee, are plans to make mandatory retirement ages illegal.

Leo Varadkar told the Sunday Independent he wanted to introduce reforms which would result in "greater flexibility around retirement" and also allow people to retire early on a reduced pension or to work later and get an increased one.

"We are also examining a change in the law that would put the onus on employers who want someone to retire before the State pension age, so that the employer would have to prove that this is necessary for some objective reason," Varadkar added.

The minister said the new laws would include exemptions for certain professions such as those working for An Garda Siochana and the Defence Forces.

McEntee said reform of employment laws are needed now more than ever due to the country's ageing population. The minister said many workers view existing legislation as "ageist" and do not want to be forced into retirement.

"When they reach a certain age set out in an employment contract, most people have no option but to retire, even if it's not what they want. I believe we must give people the option of working if that is what they want and if they have the ability to do so," she told the Sunday Independent.

Age Action Ireland spokesman Gerard Scully welcomed the reforms and said age should not be a criteria for a person being forced into retirement.

"People should be able to stay on in employment no matter what age they are and choose to retire at a time of their choosing," Scully said.

The employment reforms would also aim to bridge the gap between retirement of age 65 in most professions and receipt of the State pension at 66.

The age for receipt of the State pension is due to increase to 67 in 2021 and 68 in 2028.

Varadkar acknowledged there are "particular issues" facing workers who are forced to retire age 65 and then have to wait a year to receive the State pension.

He said this problem is being examined by the Government and the Workplace Relations Commission has now been tasked with drawing up a new code of practice for employers and employees on working for longer.

"I am very much opposed to re-introducing the old State transition pension for 65-year-olds as proposed by Sinn Fein and some others," he said.

This might be popular but it would be the wrong thing to do. It would undermine our policy of increasing the State pension age in line with life expectancy," he added.

The social protection minister noted that in 1970, the State pension age was 70 and at the time the average man lived to 68 and the average woman to 72.

"People worked for 40 or 50 years and drew the pension only for a few years. Nowadays, people work for 40 years and draw the pension for 15 or 20 years on average.

"This is obviously welcome in terms of quality of life. But if this continues, we won't be able to afford to maintain pensions at their current value into the future. Hence the need to raise the retirement age progressively over time," he said.

Sunday Independent

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