The legal retirement age will remain at 66 and people will have the choice of continuing to work until the age of 70 in exchange for a higher pension.
These are among the major elements this morning of a reform of the state pension system announced this morning by Social Protection Minister Heather Humphreys.
The package of reforms agreed today includes:
Maintain the statutory retirement age at 66 and introduce a new flexible retirement age model;
From January 2024, people will have the possibility to continue working until the age of 70 in exchange for a higher pension;
As recommended by the Pensions Commission, move entirely to a “total contribution approach” for the calculation of individual pension rights on a phased basis over 10 years from January 2024;
There will be an improvement to the state pension for long-term carers which will be introduced from January 2024. This means that, for the first time, people who have to give up their job for a long time to look after of a loved one will have their past care time recognized in the pension system”;
The Department of Business, Trade and Employment will introduce measures which allow, but do not require, an employee to remain in employment until the statutory retirement age;
Workers will have access to a PRSI contribution statement service each year in a way that enables them to understand their entitlements;
The long-term sustainability of the state pension system will be ensured through gradual and gradual increases in social insurance rates over time;
The level and rate of increase in social insurance rates will be determined on a structured basis every 5 years based on the results of a statutory actuarial review.
A commitment to explore the design of a scheme that would modify the current allowance for people over 65 to provide an allowance to people who, after a long working life, 40 years or more, are unable to continue to work in their early 60s;
Following today’s Cabinet meeting, Minister Humphreys said:
“The measures approved by Cabinet today represent the biggest ever structural reform of the Irish state pension system.
“We know that people are living longer and healthier lives, which is hugely positive. At the same time, everyone’s job and circumstances are different, so we need to move away from a ‘one size fits all’ approach to retirement age.
“That’s why, from 2024, Ireland will move to a new ‘flexible retirement age’ model, similar to systems in place in a number of other EU countries.
“Under this new model, people will continue to be able to retire and collect their pension at age 66 exactly as they can today. In addition, for the first time, people will now have the choice of continuing to work beyond the age of 66 in order to receive a higher pension.
“This new system will put the power in the hands of the people and give them the choice of what is best for their own circumstances.”
Minister Humphreys continued:
“I am also delighted that the government has accepted a number of other very important proposals.
“Over the next ten years, as recommended by the Pensions Commission, we will move to a total contribution approach, ensuring that people’s pension rates are based on the number of years they have worked and paid contributions. .
“This will be a crucial step in ensuring the sustainability of our state pension system and will help deliver a fairer and more equitable system for our citizens.
“As part of the move to the full contribution approach, we will provide a pension for long-term carers from 2024.
“Given the sacrifice carers make and the contribution they make to society, I think it is only fitting that we allow them access to state pension and I am very happy to gain government support for this proposal.
“I am pleased that the government has also backed my proposal to explore introducing supports for people who, for various reasons, cannot continue to work in their early 60s. These proposals will be worked on in the coming months. and will be inspired by the 65-year-old allowance that I introduced following my appointment as Minister of Social Protection.
Minister Humphreys continued, “Fortunately, due to the strong performance of our economy and record employment, the Social Insurance Fund is expected to show a surplus at the end of this year.
“At the same time, we have to plan for the future. Therefore, measures are needed to support the system.
“That is why the government agreed today to review social insurance rates in a structured way. This will be done every 5 years with the level and rate of increase based on the outcome of a statutory actuarial review.
The Current State Pension is paid at the rate of €253 per week for people retiring at age 66.
According to the proposed flexible model, and based on current payment rates, the five rates are estimated as follows:
66 years old – 253 €
67 years old – 266 €
68 years old – 281 €
69 years old – 297 €
70 years old – 315 €
These figures are indicative only and are based on current pension rates. They do not take into account any budget changes prior to the introduction of the flexible pension system in January 2024.
