The recommendation not to increase the State Pension age beyond the current 66 years was welcomed by Chartered Accountants Ireland today. The Institute was responding to today’s report by the Oireachtas Committee on Social Protection, Community and Rural Development and the Islands which carried out an analysis of the recommendations of the Pension Commission.
The Institute also reaffirmed its call for a clear and coherent government pensions strategy to enable workers to plan for their retirement.
Commenting, Cróna Clohisey, Tax and Public Policy Lead with Chartered Accountants Ireland said:
“We welcome today’s report as a recent survey of our members, saw a significant majority (60%) agree that the State Pension age should not increase beyond 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 can become entitled to the State Pension so that they can adequately plan for their retirement, and we are calling for clear Government policy on pensions, something that is long overdue.
“For some, staying in the work force until State Pension age is reached is not an active choice. The recommendations today are likely to be well received by these workers and we urge Government to give them serious consideration.”
The Committee also recommended that funding auto-enrolment should not be prioritised over retaining the current State Pension age. Chartered Accountants Ireland however believes that reforms to enhance the sustainability of the State Pension cannot take place without parallel reforms to increase private pension coverage in Ireland to enable workers to avoid living their retirement in poverty.
Ms Clohisey continued:
“The missing piece of the puzzle remains how the shortfall in funding the State Pension is going to be addressed. The cost of the State Pension will inevitably increase given Ireland’s demographics, and the scale of the pension funding problem will only grow unless more people start to save for a pension while they are earning. Asking employers to pay more in the way of PRSI when they are already paying high wages to compensate workers for high personal tax rates cannot be a long-term solution to this problem.
“Just as people should not be disadvantaged should they wish to retire and access their State Pension after a working life of 40 plus years, we equally need to accept that incentivising people to save via auto enrolment will in turn reduce the reliance on the State Pension. Pitting one option against the other will not solve the problem long term. We are asking Government to deliver on its promise that auto-enrolment will become a reality in 2023.”
Over 90% of respondents to the Institute’s survey support the introduction of auto-enrolment, a scheme by which workers would automatically be enrolled in a pension scheme by their employers, and both employers and employees as well as the State would contribute to the pension fund.
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