Higher State pension proposed for those who work beyond 66

Published date20 September 2022
Publication titleIrish Times: Web Edition Articles (Dublin, Ireland)
The costs of the system will be met by increases in PRSI but these will not be set until next year, pending an actuarial review of the social insurance fund, and are likely to be incrementally added to the tax bill from 2024

Minister for Social Protection Heather Humphreys will bring proposals to Tuesday morning's Cabinet meeting for approval and is likely to announce the details of the new system afterwards.

It is expected the plans will follow the political direction given by Coalition leaders over the summer and maintain the retirement age at the current 66 but allow people to work until 70 if they wish, earning a higher pension the longer they stay in work. It is understood the increase per year of extra work will be of the order of 5 per cent.

Details of the extra PRSI contributions, which may be levied on both employers and employees, will not be decided until next year. An actuarial review of the social insurance fund – from which pensions are funded – will commence later this year and be completed in spring of next year, following which decisions about PRSI increases may be made in next year's budget.

There will be no PRSI increases in next week's budget. The review of the social insurance fund will be repeated every five years.

The plan represents a rejection of the recommendation of the State-appointed Pensions Commission which last year recommended an increase in the qualifying age to 67 by 2031 and 68 by 2039 – a move which had been flagged by the Coalition parties over the summer.

The pensions issue is viewed by the Government as a political minefield. While rising life expectancy is pressuring pensions systems all across the western world, there is strong opposition among older voters to increasing the pension age. One Government source said on Monday night that the plans were an acknowledgment of "political reality".

It is also expected that the new system will introduce a new model for people who are forced to retire early.

Meanwhile, intense discussions on next week's budget are continuing in Government with the three party...

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