Dáil Éireann Debate, Monday - 9 September 2024
1028. Deputy Richard Bruton asked the Minister for Social Protection if the option to work beyond the age of 66 years is now available; the level of take-up that has been recorded to date; if she has evaluated whether the incentive in terms of pension uplift and additional contributions earned is actuarially fair to the person deferring pension payment; and if she will make a statement on the matter. [35834/24]
View answerIn 2023, I introduced legislation for a series of landmark reforms to the State Pension system in response to the recommendations from the Pensions Commission. This set of measures represented the biggest ever structural reform of the Irish State Pension system.
One of the key measures under these reforms, which came into operation from the 1st January 2024, is the introduction of a flexible pension system in Ireland where a person can access the State Pension (Contributory) at any point between age 66 and 70. It is important to note that there has never been a mandatory retirement age in Ireland. Individuals have always been able to work past their 66th birthday, if in agreement with their employer.
A claimant can now on applying for State Pension (contributory) select a date in the future for drawing it down. However, if circumstances change for that claimant after they submit their application, then they can change this date and drawdown immediately once they are over 66 years of age.
It is important to note that those entitled to claim SPC do not need to notify the Department of their intention to defer. Not applying for SPC will automatically mean the person is in deferment. As a consequence, my Department does not have a record of all those who choose to defer. As the legislation to provide for deferment took effect in January 2024, the picture in terms of the number of people choosing to defer will become clearer in 2025 and subsequent years as people choose to apply at later ages as they reach 67, 68, etc.
Where a person defers drawing down their State Pension (Contributory) they can choose whether to continue working or not. They may have already reached the maximum number of contributions required for a maximum rate pension and therefore decide not to work. If they continue to work, they will continue to pay PRSI contributions. If they have not already reached the number of contributions for a maximum rate pension, they can continue to increase their contribution record.
A person may also continue to work in order to meet the 520 contributions qualifying criteria for State Pension (Contributory) or to increase the total number of contributions for calculation of an enhanced rate of State Pension (Contributory).
The levels of uplift applicable for those deferring drawdown of State Pension (Contributory) were actuarially set so as to be cost-neutral to the Social Insurance Fund. Under these uplifts, the long-term value of pension payments from the Social Insurance Fund earned at State Pension Age should be equivalent regardless of the age at which entitlements are accessed.
Based on the January 2024 rate of State Pension (contributory) of €277.30, the maximum rates for each year of deferral in 2024 are:
• €290.30 at age 67
• €304.80 at age 68
• €320.30 at age 69 and
• €337.20 at age 70.
The rates will be set out in the Budget annually. The level of uplift will be reviewed subsequent to future actuarial reviews of the Social Insurance Fund.
I trust this clarifies the matter for the Deputy.
