Programme for government: Rise in pension age to be deferred
Threshold to remain at 66 until new report published while auto-enrolment scheme planned
The new government will introduce a new auto-enrolment pension model. Photograph: iStock
Fianna Fáil and Fine Gael agreed in the final hours of negotiations to defer the increase in the State pension age to 67 years for a year at least, bringing to an end one of the most protracted rows during government negotiations.
The proposed increase in the pension age had been a major issue in the general election campaign and Fianna Fáil had committed to retain it at 66.
However, Fine Gael had expressed reservations about this reverse, given the sharply rising cost of the State pension to the exchequer in the coming years because of an ageing population, who will also live longer in the future.
In a row that involved the two bigger parties for the most part, it was agreed that the increase be deferred.
The issue will be examined by the newly-established commission on pensions which will report back on the issue by June 2021, with any action it recommends occurring within six months of the completion of the report.
Final Draft Programme For Government
The section on pensions in the programme for government provides that those who reach the age of 65 will not to have to apply for jobseeker’s benefit or sign on, or have to show they are seeking work.
Instead, they will receive an “Early Retirement Allowance or Pension” which will be paid at the same rate as jobseeker’s allowance.
The pension provisions also attempt to address the so-called pension time bomb, where a significant proportion of the working population have no non-State pension plan.
The new government will introduce a new auto-enrolment model. It will allow matching contributions to be made by both workers and employers and offer workers a range of retirement savings products.
The scheme will not be mandatory but will require the worker to opt out if they choose not to participate in it. It envisages a phased roll-out over a decade.
There is also a new departure planned for the State pension regime. Named the Total Contributions approach, it proposes to align a person’s contributory pension more closely with the contributions they make.
It will also allow people to increase their pension provision by making PRSI payments beyond pensionable age.