State pension age cannot be changed without parallel reform of private pensions

Mar 19, 2021

Strong support for abolition of mandatory retirement among those surveyed by Institute 

93 percent of respondents in favour of introduction of auto enrolment 

Reform measures must be gradually introduced, even though time not on our side

19 March 2021: The state pension age cannot be changed without parallel reforms to increase private pension coverage in Ireland according to Chartered Accountants Ireland. The Institute’s response to the Pensions Commission’s public consultation on the sustainability of the state pension highlighted the risk of workers living their retirement in poverty in the absence of a coordinated approach to reform.  
 
A survey of some of the Institute’s 29,500 members to support its submission, found that 93 percent support the introduction of auto enrolment, a scheme under which workers would automatically be enrolled in a pension scheme, with contributions by employers, employees, and the state. 
 
Commenting, Cróna Clohisey, Public Policy Lead with Chartered Accountants Ireland said
 
“The cost of the state pension will inevitably increase, and the scale of the pension funding problem will only grow unless more people start to save for a pension while they are earning. Introducing auto-enrolment is the obvious answer to what is now a huge problem. This scheme will incentivise people to save and that in turn will reduce the reliance on the state pension.”
 
In arguing that requiring people to work for longer cannot be the only option the state considers, Chartered Accountants Ireland states in its submission that the pension age should not increase beyond the current 66 years, and 10 years notice should be given to workers for future planned increases. A clear and coherent strategy with adequate lead-in time for any changes is necessary to allow workers to plan for the long-term.
 
Continuing, Clohisey said:
 
“Almost 6 in 10 respondents among our members said that the state pension age should not increase beyond the current 66 years. For many, this already means a working life well in excess of 40 years, during which considerable tax and PRSI contributions will have been made.  Workers deserve clarity on what age they will become entitled to the state pension so that they can plan for their retirement and we are calling for 10 years notice to be given to any increases in the state pension age.”
 
Increasing the state pension age without also addressing the issue of contractual retirement ages would also risk putting further pressure on the State’s finances as many workers have to bridge the gap to the state pension by availing of the Benefit Payment for 65-year-olds. 70 percent of members surveyed by Chartered Accountants Ireland agreed that mandatory retirement should be abolished to afford workers the choice to work as long as or retire as soon as they choose to.  
 
ENDS
 
For more information
 
Jill Farrelly
PR & Communications Manager
Chartered Accountants Ireland 
jill.farrelly@charteredaccountants.ie 
Tel: 087 738 6608