(21 April 2021) Age Action presented to the Stakeholder Forum of the Pension Commission to represent the lived experience of older people.
'The goal of pension policy must be to ensure that everyone has a secure and sufficient retirement income, so that they can grow older with dignity while continuing to be socially included and active in their communities. There is still a real opportunity to take the necessary steps across the whole of government to change policies so that everyone can have security and adequate income in retirement. The state pension system should be fair, integrated, evidence-informed and sustainable as well as being gender and poverty proofed.'
Presenting to the Stakeholder Forum of the Pension Commission, Age Action argued for fair and flexible pensions for all and challenged the Pension Commission to take the opportunity to address anomolies that have arisen over successive piecemeal pension policies.
'The debate about security in retirement has sometimes been wrongly framed as just a mathematical problem of managing the cost of the state pension. But behind the statistics are the people whose lives have been badly affected by recent reforms and who are still anxious about their financial security in retirement' said Nat O'Connor, Senior Public Affairs and Policy Specialist at Age Action.
Pension Qualifying Age
Ireland’s current pension age of 66 is already higher than 27 developed countries with larger proportions of older people in their populations than Ireland. During Election 2020 Age Action, with the STOP67 Coalition, successfully campaigned for the repeal of legislation raising the pension age to 67. The Programme for Government established a Pension Commission 'to examine sustainability and eligibility issues in respect of the State Pension and the Social Insurance Fund'.
Nat O'Connor said 'The debate about pension sustainability has been framed by some analysts as a question of whether today’s higher life expectancy means that the state pension is simply unaffordable. This negative framing of the issue is not helpful. While there is no doubt that careful planning is needed to ensure a sustainable, sufficient pension for all people in retirement, some important facts need to be reiterated in this debate.'
The qualifying age for the State Pension has to be considered in the context of income adequacy in retirement, age discrimination in the workforce, the nature of work. Several factors assist in keeping the cost of the state pension lower than in other jurisdictions. The state pension is structurally flat compared to many other pension schemes across EU and OECD countries, where social insurance pensions are linked to people’s former earnings in the workplace. Also Ireland has one of the highest exit age rates from employment and a relatively low level of early retirement.
When considering the cost of pension policy in more holistic terms, attention should be paid to the considerable cost of tax breaks which the state gives to private pension savings. Contrary to some opinion, tax breaks are not “cost neutral” as they represent tax forgone that could have been used to fund essential public services, including the state pension. The National Pensions Framework calls for the reduction of tax relief for private pensions to be reduced to 33%, which should be implemented.
'Ultimately, while any government has to provide leadership, eligibility for the state pension is a democratic decision. A recent opinion poll reports that fewer than a quarter (23%) believe it should rise to 67 and two-thirds (66%) of all voters support retaining the pension age at 66; including across all ages, socio- economic groups, regions, voting intentions and between men and women' said Nat O'Connor.
The Pension Commission is also looking at how mandatory retirement clauses in private sector contracts may put more pressure on the public finances around the state pension or pre-pension welfare payments. Mandatory retirement clauses in private contracts still require many people to retire at 65, even though the state pension will not be available to them for another year. Age discrimination in the labour market is also still a major concern, with over 90% of workers over 55 believing age is an issue when seeking work.
'The goal of removing mandatory retirement clauses should not be represented as based on a desire for a higher pension age. It is a separate issue that some people can and wish to work for longer, for a multitude of reasons. However, the majority of people (as shown in surveys) wants the state pension age to remain at 66. An amendment is needed to the Employment Equality Act to make it illegal to set a mandatory retirement age lower than the state pension age' explained Nat O'Connor.