The State pension (transition) (SPT) is paid for a maximum of 12 months and is available to people who retire from work on reaching age 65 provided they satisfy the necessary PRSI contributions criteria and that they do not work for that one year between age 65 and 66.
The Social Welfare and Pensions Act 2011 provided for changes to State pension provision. SPT will cease to be paid from 2014 which will standardise the payment of pension at age 66. In addition, the age at which State pension (contributory) (SPC) will be payable will increase to 67 years from 2012 and to 68 years from 2028.
In December 2012, there were just under 14,400 SPT recipients compared to 312,300 recipients of SPC. Only 1,700 people, or 12% in all, were awarded SPT directly from employment while almost half were already in receipt of another social welfare payment.
A person who retires from work on reaching age 65 and who does not have sufficient PRSI contributions to qualify for SPT may apply for another social welfare payment, depending on their individual circumstances.
The abolition of SPT in 2014 removes the retirement condition which acts as an incentive to leave the workforce and has been widely criticised as a barrier to older people remaining in employment. The continued participation of older people in the labour market must be encouraged and facilitated to meet the challenge of an ageing society. Employees and employers need to be persuaded to change their attitudes 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. At present, my Department is working with other Departments and relevant State agencies who have a role to play in identifying and breaking down barriers to remaining in work past the age of 65.
The State pension is the bedrock of the Irish pension system. Raising State pension age and the abolition of SPT is a necessary step in ensuring the sustainability of pensions into the future and to address the challenges of changing demographics such as increasing life expectancy.