Most people will not live long enough to reap the benefits of deferring their state pension

According to a pensions expert, most men and half of women will not live long enough to be able to recoup by deferring state pensions.

If you choose to defer your state pension, you have to be at least 86 to get your money back, and that ignores interest and inflation, an actuary’s calculations Irish Independent Show.

Most men will not get that payback period as their life expectancy is around 84 years.

That means it’s a worse deal for men than women, the actuary says. The award appeared to apply to women rather than men, he said.

The actuary added an important point that you can collect your state pension at 66 and keep working. And for many, this may be the best option, especially if they’re entitled to the maximum state pension by age 66.

The Irish Trades Union Congress (ICTU) Political Adviser, Dr. Laura Bambrick, however, said taxes would have to be paid on the income of those who continue to work past 66 and this could make deferring the state pension an attractive option.

She said the Tax and Welfare Commission last week recommended eliminating lower USC rates, tax breaks and PRSI exemptions for retirees.

If you work and earn an income after age 66, deferring your state pension will not tax you at the marginal tax rate on your pension.

She said the tax savings should be factored into the calculations.

In the meantime, the Government will gradually raise the PRSI to pay for maintaining the state pension age at 66 – although a Fine Gael minister claimed it would be “completely wrong” and “unmusical”.

Incremental increases in PRSI over the next 10 years are planned next year to fund radical pension reforms announced by Social Protection Secretary Heather Humphreys that could end PRSI exemptions for retirees.

However, the Irish Fiscal Advisory Council said the pension changes approved by ministers mean “large” PRSI increases are likely.

It also said keeping the state retirement age at 66 would put more pressure on the tax system to address the shortfall in funding future pensions.

Under the government’s plans, the state retirement age will remain at 66, with higher pensions being paid to those who retire by age 70.

There is no “immediate need” to raise PRSI rates as the Social Insurance Fund (SIF) is expected to be in surplus of 3 billion euros by the end of this year, Ms Humphreys said.

“However, given demographic changes, there is no doubt that tariff increases will be required in the future,” she added.

She made the comments at the same time as her Fine Gael counterpart, Junior Minister Peter Burke, said it would be “completely the wrong strategy” and “numb” to raise PRSI to keep the state retirement age at 66.

Speaking at an official party event to outline Fine Gael’s budget priorities, Mr Burke said that PRSI was a “tax on labor” and that there was “no point in raising PRSI at (this) point”. He pointed out that it was not included in the government program.

A spokesman for Tánaiste Leo Varadkar later had to clarify that “there are no plans to increase PRSI in the immediate future or in the forthcoming budget” and Ms Humphrey’s plans “indicate that PRSI increases will be required at a later date once an actuarial Verification has been carried out”.

“The Minister has made it very clear that as SIF is currently working well, these increases will be phased and phased in over a period of time,” the spokesman said.

Funded by PRSI contributions and responsible for pension and welfare payments, SIF could accumulate billions of dollars in debt as early as 2030.

The calculations will be finalized by the end of this year by the government, which will provide the latest information on their “status”.

“Based on this review, the Government will present a roadmap for PRSI increases over the next 10 years by Spring 2023,” Minister Humphreys said. Most people will not live long enough to reap the benefits of deferring their state pension

Fry Electronics Team

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