Changes in pension systems across the western world have a strong tendency to infuriate those most feared by politicians: the gray brigade. And when the oldies hit the streets, they usually gamble for money.
When this nation voted on February 8, 2020, both major ruling parties performed very poorly – Fianna Fáil and Fine Gael lost valuable Dáil seats.
Sinn Féin even surprised itself with big gains in seats that could have been even better if their electoral plans hadn’t been based on coping with an expected decline in votes.
This election reversal was not just about pensions. But the decades-old plan to raise the retirement age to 67 has finally come to fruition – and an excellent job by unions has brought this reality to the attention of the public.
How much additional PRSI do workers have to put up to maintain a generous state pension system?
Sinn Féin rolled into the gap, promising full pensions for everyone at 65.
Fianna Fáil and Fine Gael fought and offered a commission of inquiry. We were reminded of Labor’s promise half a century ago that ‘the 70’s will be socialist’ when we realized that the reality in this case was that socialists were now approaching 70.
It has taken this tripartite coalition almost halfway through its term to come up with the new plan, which follows the promised pension commission report. What came out yesterday from Social Protection Secretary Heather Humphreys appears to have considerable merit and could have political repercussions if given the necessary public support.
However, three important questions remain unanswered. First, how much additional PRSI do workers have to put up to maintain a generous state pension system?
Second, how will a system allow people who have done heavy physical labor for over 40 years to retire earlier, perhaps in their early 60s, than people who do less physically demanding work?
Third, it is also unclear how possible statutory contract clauses that oblige people to retire at 65 can be overcome.
The state may be able to find devices to solve this problem for public sector workers. More difficult, however, are workers in the private sector who are bound by such contracts, which cannot be reversed by subsequent changes in the law.
Sinn Féin clearly believes that this pension issue is an unfinished business from which it can still benefit
There’s also a pretty smart, maybe too smart, clause that allows people to work four years between the ages of 66 and 70. If they make it to 70, the price is about a quarter more on the weekly payment. The problem arises with a back-of-cover calculation that suggests that someone who waits until 70 would have to live 16 years to recoup lost weekly pension payments. But let’s not be too cynically dismissive here either.
There are other reasons to keep working for those who are able and willing. Let’s also remember that an annuity is always taxable as part of the total gross income. So that needs to be factored into the calculations of prospective retirees.
The most beneficial elements of the pension announcement are that, in principle, the retirement age is far from going up. On the other hand, the principle of flexibility is strongly promoted in the changes.
However, Sinn Féin believes that this pension issue is an unfinished business from which it can still benefit.
Party leader Mary Lou McDonald attacked in the Dáil yesterday, making every effort to say the government is still determined to secretly raise the retirement age. This accusation does not seem plausible at this point in time. But Sinn Féin is still in the licensed world, where it only has to be right about what’s currently wrong.
Timing is a matter of politics, and despite the longer-term implications of structuring and funding an equitable pension system, it will be measured by the election cycle.
Will we vote before the PRSI bill comes?
https://www.independent.ie/opinion/analysis/pension-reforms-are-dicey-territory-but-grand-plan-by-minister-heather-humphreys-just-might-win-through-42005754.html Pension reform is tricky territory – but Secretary Heather Humphreys’ grand plan could take off