asked the Minister for the Public Service the annual extra cost to the Exchequer if the obligatory retirement age in the public service were reduced from 65 to 60 years; and the amounts by which the rates of income tax or VAT would need to be increased were resort made to either of those taxes to finance such extra cost.
Written Answers. - Public Service Retirement Age.
142.
An upper age limit of 65 does not apply in some parts of the public service and where such a limit does apply (for example, for most established civil servants) the employer normally has the right to compulsorily retire an employee from age 60. The detailed information necessary to do the costing requested by the Deputy is available to me only in respect of the civil service. If all established civil servants were required to retire at age 60 from 1 January 1982 onwards it would cost the Exchequer an extra £40 million approximately in 1982 to cover the lump sums and pensions of those who would not normally have retired. There would of course be a continuing extra pension cost in 1983 of about £10 million for the same group. In the longer run when a more normal pattern of year-to-year retirements reasserted itself the pension bill could be expected to settle at a level at least 20 per cent higher than at present, reflecting the longer period for which pensions would in future be payable.
In order to produce an extra £40 million the income tax rates or VAT rates would have to be increased for a year approximately as follows:
Income Tax Under Government Tax Reform Proposals
(a) 25 per cent to 25.7 per cent or
(b) 45 per cent to 55.6 per cent or
(c) 55 per cent to 64.1 per cent.
VAT
(a) 15 per cent to 16 per cent or
(b) 25 per cent to 30 per cent.