Raising State pension age and the abolition of the State pension (transition) is a necessary step in ensuring the sustainability of pensions into the future. The population share of those aged 65 and over is expected to more than double between now and 2051, from 11% to approximately 23% in 2050. In contrast, the working age to pensioner ratio is projected to decline gradually from 5.3 /1 to 2.1/1. This has obvious and significant implications in relation to the future costs of State pension provision. The fundamental principle involved here is that people need to participate in the workforce for longer and they need to contribute more towards their pensions if they are to achieve the income they expect or would like to have in retirement.
The Social Welfare and Pensions Act, 2011 provides that State pension age will be increased gradually to 68 years. This will begin in 2014 with the abolition of the State pension (transition) thereby standardizing State pension age for all at 66 years. The State pension age will be further increased to 67 years in 2021 and to 68 years in 2028. Even with these changes to State pensions expenditure is projected to increase from approximately 5.8% of GDP in 2010, to almost 8.3%% in 2060. The standardisation of State pension age at 66 removes the retirement condition associated with State pension (transition) which acts as an incentive to leave the workforce and has been widely criticised as a barrier to older people remaining in employment. There is no retirement condition attached to the State pension (contributory) which is currently payable from age 66.
From 2014, any individual aged 65 and unable to remain in, or find, employment would be entitled to apply for a social welfare payment based on the normal criteria. At present, my Department is working with the relevant agencies of State who have a role to play in identifying and breaking down barriers to remaining in work past the age of 65. The continued participation of older people in the labour market must be encouraged and facilitated to meet the challenge of an ageing society. Collectively, we need to change our mind-set to working longer. In the workplace, employers should try to retain older employees and create working conditions which make working longer both attractive and possible for the older worker.
