Pension reform plan with ‘auto enrolment’ set to be agreed
Proposal to allow people to defer when they get State pension to allow them work longer
It is understood the pension reform plan will propose allowing people to defer the age at which they receive the State pension to allow them to work longer. File photograph: Getty Images
A pension reform plan that will see the introduction of a so-called “auto enrolment” system within years is set to be agreed by the Government.
Minister for Social Protection Regina Doherty will seek Cabinet approval on Tuesday for a pensions reform plan that will include a number of measures to change the current system.
At its heart, however, is expected to be a system of auto enrolment, to be introduced by 2022. Ms Doherty has previously said she would make such a move, and the policy was also an aim of Taoiseach Leo Varadkar’s when he was Minister for Social Protection.
Auto-enrolment involves people being automatically signed up to a pension scheme and having to actively opt out of such an arrangement.
Ms Doherty has also said the Government wants to move to a Total Contributions Approach (TCA) – which will base pension entitlements on how much a person pays in PRSI over their lifetime.
This would replace the current system, where pensions are based on annual averages of contributions made during a person’s working life.
It is also understood the plan will propose allowing people to defer the age at which they receive the State pension to allow them to work longer.
This would also allow people to receive higher benefits when they actually retire.
On the rate of the State pension itself, the paper is also expected to say the weekly payment should increase every year in line with the rate of inflation or the average wage increase, depending on which is higher in any given year.