Five different rates of state pension will be paid to workers retiring to age 70 under landmark reforms to the system, the Irish Independent is able to reveal.
The government plans to keep the statutory retirement age at 66 – but those who continue to work beyond that will receive a “bonus” for each year they remain in the labor force.
The radical restructuring of the pension system, approved in principle by the government last week, will mean that entitlements will continue to build up until age 70.
PRSI contributions will increase in the future to fund the overhaul of the pension system.
The current state pension is €253.30 per week for someone who retires at 66. However, this new plan would result in workers getting a higher rate for each year they defer retirement.
It has yet to be decided what the higher rates or PRSI contributions will be.
The plan was drawn up by Social Protection Secretary Heather Humphreys and officials from her department are working on the new system, which is due to be announced later this year.
However, all three coalition parties have joined the deal, which financially rewards those who choose to retire later in life.
The new plan was announced by the Pensions Commission but does not directly follow the recommendations of the report, which proposes gradually raising the retirement age to 67 in the coming years.
The move is being seen as a political compromise between Fianna Fáil, who insisted the legal retirement age should remain at 66 at the last general election, and Fine Gael, who have campaigned to raise it to 67 to avoid the risk of rising pension bills encounter on the state finances.
New details of the pension transition come as Taoiseach Micheál Martin confirmed for the first time that the age for weekly welfare payments will remain at 66. “We had a meeting, the three party leaders, with ministers for social protection, public spending and health and a broad agreement was reached,” Mr Martin said.
Speaking at a news conference in Japan, the Taoiseach said people are still eligible for a pension at age 66 but are given “flexibility and options” to retire in their older years if they choose to.
He said people’s pension contributions are taken into account when payments are made.
“Basically, the world is changing. People work longer in their lives. The new system needs to reflect that,” he said.
The Taoiseach announced that work is also underway to introduce a ban on the mandatory retirement age.
Mr Martin said “rigid” contractual retirement ages do not reflect the changing face of the modern workforce.
“People have entitlements, employment contracts that employers in the private sector put on workers, but this idea of retiring at 66 has to be abandoned,” he said. “I think the market will dictate that, but we also want to make sure that people are not being discriminated against as they age because they live longer, are healthier and the quality of life improves.”
Mr Martin said the retirement age will also depend on a person’s occupation and the type of work they do.
“Not everyone (can work beyond 66), for example certain occupations cannot continue into 70 because the work is just too difficult or too stressful, but there may be other ways of organizing jobs to make it easier for people to move on and use the expertise in a different way,” he said.
https://www.independent.ie/irish-news/five-new-pension-rates-linked-to-age-you-retire-41861433.html Five new pension rates linked to your retirement age