Pension age and age-related inclusion in society
Sir, – We all agree this election should be decided on a combination of political parties’ records and promises on addressing homelessness, health services and climate crises. And our individual assessments of parties will take into account the extent to which we look beyond the headlines at the multitude and complexity of factors within each of these issues. However, it is possible that other important issues such as the age at which the State contributory pension of €234.30 per week is paid may tip the balance in favour of a party where the financial and social implications of election promises have not been fully thought out.
There were two good reasons why the eligibility age for the contributory State pension was extended in 2014. First, the aging population who will reach retirement age in the coming 10 and 20 years and beyond. Numerous actuarial projections have shown the significant pension provision requirements for this cohort and the inevitable consequences to other public service provision for all of society in funding this. CSO figures show that 37.2 per cent of the population were 45 years or older in 2016 compared to 27.6 per cent in 1986.
Second (and dangerously lost in the public discourse at present) was the expressed desire by many older people to continue working beyond the traditional retirement age. This had become a contentious issue in so many workplaces that it was necessary in 2017 for the Government to issue a “Code of Practice on Longer Working” to guide employers in responding fairly and positively to older employees who did not wish to be “forced out the door” at 65 years of age. For many older workers this is about identity and respect as much as it is about earnings, and a reversal of this positive progression on age-related inclusion would be a step in the wrong direction.
In considering the concepts of retirement and pension, we should be mindful that times and social norms move on. The traditional pension age of 65 dates back to when retirement was considerably shorter than it is now. For example, CSO figures show that the average life expectancy in Ireland from birth in 1969 was 68.8 years for men and 73.5 years for women, while for births from 2011 it had reached 78.4 years for men and 82.8 years for women. The combination of an aging population with longer life expectancy means that many more people will have a much longer retirement than ever before. Knowing this, many of us will have established a second or third career at an advanced stage of life and will be deriving genuine fulfilment from this and keen to continue for as long as we can.
But it is true that age-related health conditions can impact both wellbeing and capacity to work for some. For example, the CSO census from 2016 shows that the proportion of people aged 40 to 46 years reporting that they felt they were in very good health was 68.6 per cent, while for people aged 65 to 69 years it was 31.3 per cent (although in both age groups there will have been many more who reported being in good or fair health).
It is also true that the prospect of resorting to the lower jobseeker’s benefit of €203 per week to cover the one-year eligibility gap between the traditional retirement age of 65 years and State contribution pension eligibility age (66 years at present and set to increase to 67 and 68 years in 2021 and 2028 respectively) is disrespectful and unfair to those who have paid PRSI for a long number of years and who find themselves unable to find alternative work at this stage of their life, whether that is due to health or opportunity.
Transition to disability benefit isn’t fair either – not all will meet the assessment criteria, that benefit is limited to two years and that comes with lower dependent payments than provided by the State contributory pension.
As part of our commitment to supporting diversity in society, we should be looking to recognise that age 65 means different things for different people, rather than restoring a blanket retirement policy that not only undermines positive progress on age-related inclusion but also impacts funding available to address the homeless, health services and climate crises. A solution would be to introduce an optional “early retirement benefit” for workers aged from 65 years, prior to an age-based transition to the contributory State pension, with the early retirement benefit on terms aligned with the contributory State pension (PRSI eligibility, payment rates and dependent rates). This would effectively neutralise any argument in favour of lowering the actual pension age, supporting older workers who are not able to or do not wish to continue working, while acknowledging that there are many older people who can and wish to continue working well beyond 65 years of age and need continued access to employment supported through public policy and social norms. – Yours, etc,
Sir, – With all the electioneering attention around the changes to the age of retirement, nothing is being said about the proposed changes to the calculation of the pension payments to the total contribution approach (TCA) system. This was introduced in March 2018 as an alternative to the yearly average model which, with the inclusion of the 20-year home caring credit, benefits many who have taken time out to care for children, etc. At present people retiring are paid at the best rate achieved on either of the systems.
However, according to the Citizens Information service, the TCA system is to replace the yearly average system from “around 2020 onwards”. This no doubt will impact heavily on anyone who has lived and worked abroad for part of their life and now, nearing retirement, will find themselves with far less pension than expected based on the system that is currently in place.
A person who lived abroad outside the EU or countries that are not part of the bilateral social security agreement for 20 years and then moved back to Ireland and worked 20 years here can currently, on the yearly average system, expect a pension of €211 per week. However, on the new TCA system they will only receive €124 per week.
Although the new TCA system is fairer in many respects, it needs to be implemented over a much longer period, with far more publicity, in order to allow people to plan for their retirement under the new TCA calculation method. – Yours, etc,