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Dáil
‹ Ceisteanna ó Cheannairí - Leaders' Questions

Pension age and retirement reform

Summary

Deputy Howlin argues that pensions policy should reflect longer lives and the commission’s recommendations, including tax and PRSI changes. The Taoiseach says the Government will consider the report with an open mind and supports ending mandatory retirement clauses.

As the Taoiseach will recall, a rise in the pension age was a major issue in the last general election. Immediately after the election the Government set up a Commission on Pensions which published its report last October. The trade union-led campaign, STOP67, was successful in the interim and the proposed increase was stopped. The commission report proposed to freeze the pension age until 2028 and then to begin phased increases by increments of three months to reach 67 by 2031 and then to rise by three months every two years to hit 68 by 2039. As part of the next steps, the Government also sought the views of the Joint Oireachtas Committee on Social Protection. The commission's report was referred to the Cabinet committee on economic recovery and investment which is to bring recommendations for implementation by the end of March.

Today the Joint Oireachtas Committee on Social Protection, in its response to the report of the Commission on Pensions, made a series of landmark recommendations which are clearly at odds with the recommendations of the Commission on Pensions last October. Today's report proposes that the State pension age should not rise beyond the age of 66. It makes the very important point that this cross-party committee of the House which looked at the facts is unconvinced that the gradual increase in the pension age would have any meaningful impact on the fiscal position of the Social Insurance Fund. It proposes to boost funding for the Social Insurance Fund with a series of PRSI increases. It also calls for a ban on the use of mandatory retirement ages. One of the most important recommendations is that we should now build flexibility into our pension system to allow those with 40 years of contributions to access a State pension at the age of 65. Many people now approaching retirement age started working in their teens and in some cases, have worked for 40 or 50 years since then, paying their taxes and social contributions.

Will the Government accept the recommendation of the cross-party committee that the pension age should stay at its current age of 66? Will the Taoiseach confirm that legislation will be brought forward to ban the use of mandatory retirement clauses? Will the Government act to allow those with 40 years of contributions to access their pension at 65, as recommended by the all-party committee?

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First, I thank the Deputy for raising this issue. As a former member of Government, Deputy Howlin realises the enormous issue facing society because we are living longer, which is a good thing. In the last 50 years, the transformation of health has been extraordinary. In the last 100 years the average life span has increased by 25 years in this country, which is quite a dramatic transformation from when the State was founded. In the last 20 years in particular, survival rates from heart disease, cancer and stroke have been dramatically transformed. It is a good story that we are living longer but it clearly has implications for pensions and for how we sustain society in the context of longer lives, thanks be to God, and greater access to healthcare, interventions and so on. That was the work of the Commission on Pensions which was established and the Cabinet committee referred its report to the Oireachtas, which is what was agreed. The Oireachtas has now considered it and made its report.

The Commission on Taxation and Welfare is also relevant. The findings of the Commission on Pensions will also be examined by the Commission on Taxation and Welfare because it is all interrelated in terms of how we sustain the system. I have not read the cross-party committee's report in detail but look forward to doing so. I think Deputy Howlin said that it is suggesting PRSI increases. That is interesting.

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Yes, or tax changes.

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Well, increases, basically, let us be honest here.

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That is what all the parties in the House have signed up for, it seems, if that is what is in the report. I understand, by the way, why that would be a recommendation. The Cabinet committee will look at this after the publication of the report of the Commission on Taxation and Welfare. We said we would look at the pensions issue six months after we got the Commission on Pensions report, which will be the end of March. We intend to come back to the House on that.

We support the banning of mandatory retirement clauses. People should be allowed to continue to work if that is their wish and their choice. That makes sense relative to the fact that we are living longer. There will not be any easy choices here. Politicians tend to reach for the easy choices, if we are all honest. Not every Oireachtas committee goes for the pain option. I have been there.

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I try to avoid masochism myself.

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Yes, I know. When I was in opposition the last time, the only committee that did its work honourably, or at least the majority did, was the Oireachtas Joint Committee on Climate Action. It made recommendations that were not palatable electorally but Oireachtas committees are not often disposed to making recommendations that are electorally unpalatable. That said, I will read the report and I accept the points made regarding the core principles. We need to engage further.

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I meant to take the opportunity on my first contribution to sympathise with the family of the late Mr. Noel Treacy, with whom I had the privilege of working in this House.

The Taoiseach is right. I have served in government in the past and this is a difficult decision. It is not an easy decision but the fact that an all-party committee looked at this and came up with solutions that are fiscally sound is something that must carry weight in this House.

Covid has changed the way we look at work and our attitudes to work location, flexibility and the nature of work itself. It should also change our attitude to and fixed policies on pensions, pension age and so on. A very coherent argument was made by the Chairman of the Oireachtas committee, Deputy Naughten, this morning and I ask the Government to approach this with a very open mind and not to focus on what was done in the past or on people's position in the past. Instead, it should say that in the post-Covid era, everything is up for review. Hopefully we can agree that we can have the recommendations of the all-party committee accepted.

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I have not read the report of the Oireachtas Joint Committee on Social Protection in detail. I thought Deputy Howlin said it had recommended increases in PRSI but I am not so sure that it has done so.

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It recommends tax increases and some increases in PRSI. It recommends, for example, reducing the tax threshold for high earners and their very large pension pots.

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I have an open mind, genuinely. The Government will approach this with an open mind. The Commission on Pensions did very detailed work, under Ms Josephine Feehily's chairmanship. It did genuine, bona fide work.

It is work that will feed in. The joint committee has examined that. The Deputy made the point that it is fiscally sound. That will be examined. It has to be fiscally sound. There is no point pretending to future generations or leaving them short because this generation has not devised policy responses that guarantee and sustain pensions well into the future and decades ahead. That has to be a core objective of the entire House. We will approach this with an open mind in terms of the sustainability of the pension environment because it is key to a quality life.

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