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State pension with flexible qualifying age could work



'It would be a better option than forcing 68-year-olds to carry on in their jobs' (stock image)

'It would be a better option than forcing 68-year-olds to carry on in their jobs' (stock image)

'It would be a better option than forcing 68-year-olds to carry on in their jobs' (stock image)

The expression 'kicking the can down the road' springs to mind whenever pensions are discussed. It's one of those cans that most politicians would really like to kick out of sight.

The present Government is little different from its predecessors. The parties couldn't agree on raising the State contributory pension age to 67 next year, even though this is already legislated for.

So they reached for the time-honoured fall-back position - a 'review'. They deferred implementing the decision pending yet another report, this time from the Commission on Pensions.

During the election, Fianna Fáil was clear that it wanted to keep the pension age at 66. The party feared it would have lost out even more to Sinn Féin if it took any other line, according to political insiders. But if the present Coalition can't implement a decision to raise the State contributory pension age to 67, what chance is there of a future administration raising it to 69, as recommended by the Fiscal Advisory Council which advises the Government on the public finances?

We've been told often enough that we are facing a pensions 'time bomb'. The council's report shows that it might occur sooner than we hoped for.

Yes, we have proportionately more young people and fewer older people than most of Europe now. But we will catch up within the next decade and a half. By 2035, our ratio of people aged 65 and over and those aged 15 to 64 will be in line with the rest of the EU. At the same time, life expectancy continues to rise and could reach 89 on average by 2050.

These demographic changes will mean greater pressure on pensions and health costs which will be the main drivers of Government spending. Prompt action is needed because under current policies, Government spending will outstrip revenues from 2025 as pensions and health costs increase, according to the council.

Whatever about its diagnosis, the prescribed medicines will prove unpalatable to many politicians. 'Strengthening public finances' sounds fine until the same politicians have to take decisions to raise specific taxes or make specific spending cuts. 'Adjusting the pension age in line with rising life expectancy would make the system more sustainable' may sound reasonable but not if you are a low-paid worker with no extra private pension to look forward to.

The ICTU's social policy officer Laura Bambrick suggests a flexible qualifying age for the State pension to take account of the different ages at which people enter full-time employment. These times vary between manual and college-educated professionals. It's a controversial notion but one adopted by a number of European countries.

We know that life expectancy, as well as income, quality of life and health outcomes differ across social classes. Factoring those variations into a State pension scheme with flexible qualifying ages would not be easy but could be worth looking at.

It might be a better option for society than compelling 68-year-olds who have been in menial, stressful jobs for more than half a century to keep working until they reach their next birthday.

Irish Independent