Tuesday, 19 February 2019

Ceisteanna (624)

Niamh Smyth


624. Deputy Niamh Smyth asked the Minister for Employment Affairs and Social Protection her plans to reinstate the State transition pension to prevent persons forced to retire at 65 years of age from having to apply for jobseeker's allowance for one year until they reach the State pensionable age of 66 years of age; and if she will make a statement on the matter. [8080/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Employment)

It is well known that people are living for much longer. As a result of this demographic change, the number of State pension recipients is increasing year on year.  This has significant implications for the future costs of State pension provision which are currently increasing by approximately €1 billion every 5 years.  In the coming decades, the ratio of workers to pensioners is set to halve, which clearly has significant implications for any state pension system, based as it is on a pay-as-you-go basis.

The purpose of changes to the State pension age is to make the pension system more sustainable in the context of increasing life expectancy.  This sustainability is vital, if the current workers, who fund State pension payments through their PRSI, are to receive a pension themselves when they reach retirement age.  Therefore, the Social Welfare and Pensions Act 2011 provided that State pension age will be increased gradually to 68 years.  This began in January 2014 with the abolition of the State pension (transition) which was available to people aged 65 who satisfied the qualifying conditions.  This measure standardised the State pension age for all at 66 years.  This will increase to 67 in 2021 and to 68 in 2028.  Reversing the 2014 change could be expected to cost a sum in the region of €100 million per annum, depending upon the impact it would have upon retirement patterns. 

In most cases, it is hoped that workers will continue to work up to State pension age, and where this happens, they will have higher incomes, and possibly higher pensions, than if they retired on their 65th birthday.  Where this is not possible and a person exits the workforce before reaching State pension age they may apply for either the jobseeker’s benefit or jobseeker’s allowance schemes.  Jobseeker’s payments are currently paid to eligible jobseekers aged 18 to 66 years.

Jobseekers Benefit is payable subject to the person satisfying the general scheme conditions.  This entitlement is normally paid for 9 months (234 days) for people with 260 or more PRSI contributions paid and for 6 months (156 days) for people with fewer than 260 PRSI contributions paid.  Arrangements are in place to provide that jobseekers whose benefit expires in their 65th year can generally continue to be paid benefit up until pensionable age (66 years) provided they satisfy the necessary contribution conditions.  The jobseekers schemes are kept under review and any further changes, including entitlement beyond the 66th year, will be considered in that context.

It is important to remember that there is no legally mandated retirement age in the State, and the age at which employees retire is a matter for the contract of employment between them and their employers.  While such a contract may have been entered into with a retirement date of 65, in the context of the previous State pension arrangements, there is no legal impediment to the employer and employee agreeing to increase the duration of employment for one or more years, if both parties wish to do so.  In this regard, the Workplace Relations Commission has produced a Code of Practice on Longer Working and the Irish Human Rights and Equality Commission (IHREC) has published guidance material for employers on the use of fixed-term contracts beyond normal retirement age.

I hope this clarifies the matter for the Deputy.