Future pension age must rise above 68
OECD launches reports on how to fix Ireland’s pension time bomb
The OECD said Ireland’s position on the pensionable age may not go far enough.
The Government will have to raise the future retirement age past 68 with mandatory enrolment in private pension schemes if it is to ensure sustainable, equitable cover into the future, the Organisation for Economic Co-operation and Development (OECD) has said.
Launching its review of Irish pension provision yesterday, the most radical to date, the organisation said Ireland’s position on the pensionable age may not go far enough.
It is currently 66, and is due to rise to 67 by 2021 and to 68 by 2028. “The good news is that financial sustainability isn’t, or doesn’t, seem to be an insurmountable challenge for Ireland,” said the principal author and director of employment, labour and social affairs at the OECD, John Martin.
“But we do point out in the report that it may be necessary to envisage further increases in the State pension age beyond 68 if we are to really bed in financial sustainability.”
“Courageous” moves had already been taken in raising the age, he said. He did not specify what further increase might prove necessary.
Ireland’s situation compares well to other OECD countries but today just 51 per cent of workers between the ages of 20 and 60 have pension coverage.
“We believe that mandatory enrolment of workers in private pension schemes would be preferable to auto-enrolment in order to increase coverage significantly and we believe that equity requires greater alignment of the pensions of public and private sector workers,” said Mr Martin.
Minister for Social Protection Joan Burton, who commissioned the report, said the principal goal was to ensure “older people receive a safe and adequate income that will maintain them and their families in retirement”.
The document, titled Review of the Irish Pension System , also recommends that public servants move away from the current final-salary pension scheme and that all private sector workers be forced to invest in private pensions.
The “simplest, less costly and most effective way to increase coverage” is through the introduction of mandatory pension savings. It also suggests that “healthy” employers should not be allowed to walk away from pension liabilities. Ms Burton said no major overhaul could be brought in until the economy is in a greater state of recovery.