People living longer should not be viewed as ‘problem’, says pensions chairwoman

Josephine Feehily says retirement age should go to 68, but more gradually

Josephine Feehily: ‘The entire report is based on the principles of social solidarity’. Photograph: Nick Bradshaw

Josephine Feehily: ‘The entire report is based on the principles of social solidarity’. Photograph: Nick Bradshaw

 

Pensions Commission chairwoman Josephine Feehily has said that the fact that Irish people are living longer and healthier lives should not be viewed as “a problem”, it should be something that is planned for and managed.

Speaking on RTÉ Radio’s News at One where she was explaining the options set out in the Commission’s report on pensions which was launched on Thursday, Ms Feehily called for more information to be made available to the public about the age at which people would qualify for the State pension.

“We are suggesting the [retirement] age should go to 68, but more gradually and slowly,” she added.

“The entire report is based on the principles of social solidarity”, all of society should contribute. This was an inter-generational issue and it was not fair to expect young people to pay for everything.

“We’re essentially saying, if as a society we want to make sure that our older people have an adequate pension for as long as they need it then all of society should contribute — there’s an inter-generational piece involved here — quite often older people are somewhat more comfortably off, perhaps they’ve paid for their home and expecting younger workers to pay more, only younger workers to pay more, in order to keep pensioners — seems to us to be a bit uneven and so we want everybody to contribute to the funding of this deficit.”

Ms Feehily said there were people who wanted to work beyond the age of 65 and they should have that option. The gap between people forced to retire at 65 and receiving their State pension at 66 needed to be closed, she said.

Under European law people had the right to stay at work beyond the age of 65.

The Government had to make policy choices about how to fund services. There was no prospect of money running out, she explained. If necessary the Government could borrow more money or raise taxes or cut services, but the Commission did not want to see that happen.

Paying for pensions could be planned in advance so there could be certainty that there would be an adequate amount “to keep people out of poverty”. It was a social requirement that the basic pension would keep people out of poverty, which was judged to be 34 per cent of the average earning, that figure should be reviewed annually and determined by an independent source so as to avoid uncertainty, she said.

‘Time to consider issue’

Minister for Finance Paschal Donohoe has said that the Government will not make a decision on the recommendations of the Pension Commission report until next March.

Mr Donohoe said on Friday the Government will “take the time to consider the issue” and refer it to an Oireachtas Committee.

The changes recommended in the report would not immediately happen, he told Newstalk Breakfast.

Employers will not be allowed to force people to retire before the State pension age under recommendations in the report, which was published on Thursday evening.

It suggests the Government should introduce legislation that would align retirement ages in employment contracts with the State pension age. It would allow, but not compel, a worker to continue working until they hit a State pension age that will rise slowly over the next two decades.

The proposal is one of a number made by the Pensions Commission, which was tasked with examining issues around the State pension age and its funding after the issue emerged as one of concern among voters at the last general election.

Mr Donohoe said the population of the country was getting older and it was costing €600 million per year at present to maintain benefits.

“As the country gets older, that will cost more,” he said.

The Minister said that the challenge was to provide the best benefits possible for people when they get to later life.

Opposition to proposals

Meanwhile, Sinn Féin’s spokesperson on Enterprise, Trade and Employment Louise O’Reilly has repeated her party’s opposition to proposals to raise the pension age in the report.

Ms O’Reilly told the same programme it had been “a bit sneaky” of the Government to publish the report after their “big announcement” on the corporation tax rate.

The Dublin Fingal TD said while she had not yet read the whole report, she was concerned about the proposals she had seen such as the State pension rising by three months each year from 2028 until it reaches 67 in 2031.

“Only a couple of months ago during the Dublin Bay South by-election pledges had been made not to increase the pension age,” she said.

Ms O’Reilly said that workers should have a choice – to retire at 65 if they wished or to continue working until the age of 70.

Age Action has said that Government decisions, starting from Budget 2022 next Tuesday, will “determine the adequacy of the State pension as a foundation for a secure retirement for the majority of Irish people in future years”.

Nat O’Connor, senior public affairs and policy specialist with Age Action said, any plan to fund the State pension in new ways must ensure that it is “sufficiently funded to provide an adequate income for us all in older age”.

“Unfortunately, the State pension has fallen in purchasing power by €10.24 since January 2019, when compared to the Consumer Price Index of inflation,” he said.

“Next week’s Budget 2022 will be a test of whether the Government is committed to ensuring that the State pension provides an adequate income that allows people to meet the rising cost of living, not least energy costs that have spiked in recent months.”