Micheál Martin signals radical shake-up to Irish pension system – The Irish Times

Taoiseach Micheál Martin has announced a radical overhaul of the Irish pension system.

Speaking during his visit to Japan, Mr Martin said a “broad agreement” had been struck between coalition leaders and ministers of social welfare, public spending and health.

The changes will extend to granting “more flexibility and options [for people] when to retire” and that the “rigid and mandatory cut-off point” for retirement would end. “This idea of ​​retiring at 66 needs to go,” he said.

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However, the age at which people will be entitled to state pensions will reportedly remain at 66, with some PRSI increases being given in coming years to help pay for this. Greater flexibility will be offered in terms of state pension, people who are not entitled to full rights at the age of 66, because they have not worked and contributed to the PRSI sufficiently a long time, will likely be able to continue working if they choose and accumulate more credits before receiving their pension.

“The world is changing; people are working longer in their lives,” the Taoiseach said, insisting the pension system should “reflect this” by providing incentives and better reflect contributions and work history.

Mr Martin said the government ‘wants to make sure there is no discrimination against people because of their age’. People are living longer, they are healthier and they are working longer in their lives.

He said the retirement age also depended on the type of work people were doing. “People have rights and contracts with private sector employers.”

Japan, which has the oldest population in the world, offers an indicator for the future. More than 29% of Japan’s population is aged 65 or over, and a quarter of all older Japanese are now choosing to continue working. The effective retirement age for men in Japan is now close to 70, according to the OECD. Similar changes are happening elsewhere. The World Bank predicts a retirement savings gap in major countries of around $400 trillion (€391 trillion) by 2050.

A report from the Pensions Commission last October recommended that the retirement age in Ireland should be raised in stages until it reaches 67 in 2031 and 68 in 2039. M. PRSI increases in the over time could be used to fund this.

The Commission also said an annual contribution from the Treasury would be needed to ensure that the Social Insurance Fund, from which pensions and other benefits are paid, remains in surplus.

Government sources say the fund’s position has been bolstered in the short term by the strong increase in employment and wages in the economy. However, in February, Social Protection Minister Heather Humphreys announced changes when she said the pension system was “not sustainable” in the longer term, due to an aging population.

Mr Martin noted that the details of new legislation and pension reforms “need to be worked out”, but said “flexibility” was key. “There is a wide range of measures in the [pension] commission report that would ensure sustainability. There are different ways to achieve sustainability in Ireland.

The Taoiseach denied that the retirement age would continue to rise. He said the retirement age would not go up to 67 or more and pointed out that there were a whole series of recommendations in the commission’s report.

Competing political promises over when someone should be eligible for the state pension was a key battleground in the 2020 general election, when Sinn Féin pledged to lower the age to 65 year.

A planned increase in the retirement age to 67 has been postponed – it was due to take place last year – and instead the coalition set up a commission on the matter, which recommended a gradual increase in the retirement age from 66 to 68 over the next 17 years. But that is now irrelevant under the emerging new plan.