No ‘demographic need’ to raise pension age from 66, Siptu says

State to have smaller proportion of elderly than EU average in medium term, union says

By 2030, the number of people aged 65 and over in Ireland would amount to 18.4 per cent compared with 24.6 per cent in the EU, Siptu said.

By 2030, the number of people aged 65 and over in Ireland would amount to 18.4 per cent compared with 24.6 per cent in the EU, Siptu said.

 

Ireland’s largest trade union has told the Commission on Pensions that there is no “demographic need” to increase the pension age beyond the current level of 66 in the medium term.

In a written submission to the commission, which was set up by the Government last year to look at the State pension age after it became a major issue in the last general election, Siptu said Ireland would have a smaller proportion of older people relative to the EU average.

By 2030, the number of people aged 65 and over in Ireland would amount to 18.4 per cent compared with 24.6 per cent in the European Union, it said. By 2050, the figures would be 25.6 per cent in Ireland and 29.3 per cent in the EU.

In addition, Siptu said most EU countries would have a pension age of 66 or lower by 2030, including Austria, Finland, Luxembourg, Belgium, Portugal, Poland and Slovakia. It noted that Croatia does not plan to increase the age to 67 until 2038.

Siptu has also called for the new benefits payment for 65 year olds to be increased to match the former transition pension, which helped people to bridge the financial gap between the retiring at 65 and receiving the State pension at 66.

The difference between the two is €45.30 a week or €2,362 per annum while only those retiring with 13 weeks of paid contributions in a relevant recent tax year quality for the new payment.

The new payment was introduced in February and removed the requirement for retirees to sign on.

Some 12,630 people received the transition pension in 2014, its final year of operation.

Siptu said a “key failing” of the new payment was the fact that it did not match the transition pension, the top rate of which was equal to the full State contribution pension.

Cost savings

Siptu has challenged the level of cost savings that would be achieved by increasing the State pension age to 67.

The Department of Employment Affairs and Social Protection has put the gross savings at €570 million but Siptu said the net saving could be just €200 million when offsetting costs are included. These would include the cost of the benefit payment and other social welfare supports that are potentially available to retirees.

In addition, Siptu wants workers to have the statutory “right to remain” in their workplaces beyond the current age of 65, until at least the State pension age.

“The increase in the State pensions age has deepened the hardship felt by workers forced to retire from their employment at an age before which the State pension becomes payable,” it said.

Chaired by Josephine Feehily, the commission is due to report on its work, findings, options and recommendations to the Government by June 30th. An increase in the State pension age to 67 had originally been pencilled in for this year, and to 68 in 2028.