State pension age increases to 66

The age of eligibility for the State pension has increased to 66, the first in a series of changes which will raise the qualification age for the pension by a further two years over the next decade and a half.

As of yesterday, the transitional State pension – paid to those aged between 65 and 66 – has ceased to exist, leaving many due to retire from this year onwards out of pocket.

Rather than availing of the full contributory pension of €230.30 a week, those retiring from now on will instead have to apply for jobseeker’s allowance, which is paid at a rate of €188 a week.

The change affects those born on or after January 1st 1948 .

More increases in the qualifying age for the State pension are due to come into effect over the coming years. It will increase to 67 years in 2021 and to 68 years in 2028.

The changes were agreed with the EU-IMF troika as a condition of the State’s bailout and are aimed at ensuring the future sustainability of the pensions system.

This is unlikely to be the end of the increases given that the Government is monitoring the retirement age in line with changes in life expectancy.

Rise in numbers
At present, there are about six people working for every retired pensioner. By 2055, however, this will drop to just 2.3 people working to fund the pension of each retired person.

Britain's chancellor of the exchequer George Osborne recently suggested the qualification age could reach as high as 70 in the UK over the coming decades and pensions experts say Ireland could well follow suit.

The move to cease the transitional payment earlier this week standardises the State pension age at 66 years for all applicants.

Legislation paving the way for the move was provided for in the Social Welfare and Pensions Act, enacted just over two years ago.

Those close to retirement age who apply for the jobseeker’s allowance will be treated differently to others in receipt of welfare payments.

For example, claimants over the age of 62 will not be required to engage with the Department of Social Protection’s “activation” process, and will not be liable for sanctions such as temporary withdrawal of benefit for non-compliance.

They will receive their payments electronically and may not need to sign on more than once a year.

However, they will still be required to provide evidence that they are "genuinely seeking work", such as making job applications, and they must also be available for full-time employment.

Restricted eligibility
Various changes are also restricting eligibility to the State pension. In 2012, the Government changed the qualifying criteria for a State pension which meant that anyone born on, or after, April 6th 1946, is required to have 10 years PRSI contributions to qualify, up from just five previously.

Other changes due to come into force over the coming years include a new “total contributions approach”, which will replace the current averaging system from pension qualification.

Under this system – due to come into force in 2020 – the level of pension paid will be directly proportionate to the number of social insurance contributions made by a person over their working life.

A total contributions requirement of 30 years contributions for a maximum pension will be introduced.

For example, a person with 10 years of contributions will be entitled to just one-third of the State pension, or €75.90 at the present rate.