Ireland’s Pension Commission advises SPA increase to 68 by 2039

Ireland’s Pension Commission has recommended increasing the country’s state pension age gradually to 68 by 2039.

In its Report of the Commission on Pensions, the commission made several recommendations to address the sustainability of the state pension system and the Social Insurance Fund (SIF). The independent commission, chaired by Josephine Feehily, was established in November 2020.

Minister for Social Protection, Heather Humphreys, has submitted the report to the government seeking approval to publish and agreeing the next steps to be taken by the government.

Among its recommendations, the commission recommends a gradual incremental increase in the state pension age by three months each year commencing in 2028, reaching 67 in 2031 with further increases of three months every second year reaching 68 in 2039. In addition, it said retirement ages in employment contracts should be aligned.

The commission said it was a “strategic risk” not to take steps to “shore up the fiscal sustainability of the state pension in its own right”.

However, it has also suggested access to the state pension age should be flexible, with people being able to defer access up to the age of 70.

In terms of pay-related social insurance (PRSI), the commission recommends an increase for, employers, future pensioners and current pensioners. Those who defer access to their state pension would also be able to continue paying PRSI to increase their state pension when they do retire.

Commenting, Humphreys, said: “The state pension is valued by all of society, and it is the bedrock of the pension system in Ireland. It is extremely effective at preventing pensioners from falling into poverty and we want to make sure that this stays the case into the future. There are clear challenges in ensuring the sustainability of the state pension for future generations. This has been known for years and confirmed in the Report of the Commission on Pensions.”

In terms of the next steps, the government has agreed that the report will be sent to the Joint Oireachtas Committee on Social Protection to seek its views on the recommendations. The commission also said that as the changes to the pension funding model should be considered as part of a wider review of the tax and social insurance system, the government has also agreed that the Commission on Taxation and Social Welfare will be asked for its view on some of the recommendations.

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