FG and FF back transition payment for persons retiring before to right to State pension

Consultant highlights inequity which sees public sector workers get supplementary pension

The leaders of Fine Gael and Fianna Fáil have both committed to introducing a transition payment equal to the value of the old age pension for those forced to retire before qualifying for the State payment.

Leo Varadkar and Micheál Martin have both said they will introduce new policies which will not leave pensioners out of pocket and will also prevent them from signing on from the dole.

Pensions have become an unexpected general election issue, with politicians of all parties reporting anger on the doorstep from people who are being denied the State pension and forced to sign on for lesser benefits after they are forced to retire.

At present the qualifying age for the public pension is 66, having changed from 65 in 2014. This is set to increase again, via further seven-yearly updates, to 67 in 2021, and 68 in 2028.

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However, many private sector companies continue to force people to retire at 65. Those who had to retire at 65 but wait until 66 before they are eligible for the State pension have had to sign on for the dole, and this has caused controversy.

Sinn Féin and Labour have said they want the State pension age to return to 65. Politicians have been scrambling to put in place measures to address what they have referred to as anomalies in the system – even though the issue was flagged as far back as 2016 in a inter-departmental report.

Contributory pension

The State contributory pension is €248 per week, and the jobseeker’s allowance is €203, meaning a new transition payment at the same level as the pension would cost an extra €45 per person per week.

A Fine Gael spokesperson said the cost of the move would be detailed in the party’s election manifesto, which will be published later this week.

“We are working on the details of that now,” Mr Varadkar said. “Certainly what people are saying on the doors and in the streets, what our candidates are saying back to us, is that there is an anomaly.

“There are people who are required by their contracts to retire at 65 or 66 before the new retirement age and they don’t want to have to sign on.

“We hear that, we get that, we accept that that is a problem, so we are working on a proposal to put in place a form of State transition pension that means that people in those circumstances will be able to get their pension early.”

In a statement on Tuesday evening, Minister for Employment Affairs and Social Protection, Regina Doherty confirmed the move, saying “the new transition pension will be paid at a rate equivalent to the contributory State pension”.

She said: “This change provides financial certainty to people retiring at 66.”

Fianna Fáil has estimated that restoring the pension age to 65 would cost €620 million a year, based on the Government’s own figures.

Mr Martin said there was a "lack of fairness there".

“There is a lot of concern out there in relation to it, and I think the key point is that someone in the private sector doesn’t have to rely on social protection at the end of their working life to top up their income.

“We are going to plug that gap, and make sure there is a transition pension payment equal to the State pension that covers it for them. And I think that will level things up somewhat.”

Inequity

Meanwhile, a pensions consultant has highlighted the inequity in the pensions system which sees public sector workers who retire before the State pension age paid a supplementary government pension while private sector employees are not.

Tony Gilhawley of Technical Guidance said no similar provision was in place for private sector workers legally obliged to retire at 65 but unable to claim the State pension until a later date.

Measures in place since 1995 mean that retiring public servants are not affected by the pension gap. Instead, where there is a shortfall in their State pension benefit they are covered by a supplementary pension.

“So the State does not expect its own employees to ‘go without’ if they retire before their State pension age, but does currently expect the private sector to,” said Mr Gilhawley.