Tuesday, April 23, 2024

Ireland to increase state pension for workers above 66 years

People will have the option from 2024 to continue working up until the age of 70 in return for a higher pension for each additional year they work.

• September 20, 2022
Pensioners
Pensioners [Photo Credit: De Beers Pension Fund]

Ireland on Tuesday announced that workers above 66 years would be given a higher state pension the longer they stay in work.

The country was sidestepping a recommendation by a government-appointed commission to gradually increase the retirement age to 68 to help fund the ageing population.

Under the proposed flexible model agreed by ministers, people will have the option from 2024 to continue working up until the age of 70 in return for a higher pension for each additional year they work.

The state pension currently stands at 253 euros per week for those who retire at 66, and will increase to 315 euros for anyone who stays in the workforce until the age of 70.

Social insurance rates will gradually be increased over time to pay for the measures, the government said.

Similar to other countries, Ireland raised the retirement age to 66 in 2014 but it deferred plans to raise it to 67 in 2021 and again to 68 in 2028 after the pension age became a major issue at the 2020 election.

The coalition instead appointed a Commission on Pensions, whose recommendations included gradually increasing the pension age so it reached 67 in 2031 and 68 in 2038 to help deal with what will become a major fiscal sustainability challenge.

Ireland has a young demographic profile compared to its EU counterparts but the old-age dependency ratio was set to rise sharply in the next two decades so that by 2050 there will be just over two people of working age for every person over 65, compared with almost four currently.

The finance department has estimated that by 2030 age-related expenditure was expected to cost an additional 3.3 per cent of gross national income when compared to 2019 costs.

Mary Lou McDonald, the leader of Sinn Fein, the largest opposition party that has a huge opinion poll lead ahead of elections in 2025, called the proposals “a Trojan horse,” and said that it should be cut to 65.

(Reuters/NAN)

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