Coalition ‘agrees’ retirement age should stay at 66, but ‘there is a cost to that’

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The Welfare Minister said government parties now agree the retirement age should remain at 66 – but admitted the move could lead to some PRSI increases.

A memo on the contentious issue will be presented to Cabinet ahead of the September 27 budget.

The decision to maintain the retirement age at 66 runs counter to the findings of the Pensions Commission report, which warned of significant gaps in the social insurance fund if the retirement age was not raised.

‘I’ve been working on this a lot with my government colleagues and I plan to present a memo to Cabinet ahead of the budget on the recommendations on the retirement age,’ Minister Heather Humphreys said yesterday.

“I think it’s fair to say that we all agree that the retirement age should remain at 66. But that comes at a cost.”

“This will involve looking at potential increases to the PRSI. But I won’t go into details. But what I bring to it is flexibility.

“I think it’s widely accepted that you’re allowed to work longer and then get a higher pension. I think it gives people choices…and I think it’s fair and appropriate.

A memo on the contentious issue will be presented to Cabinet ahead of the September 27 budget. Photo: Sam Boal/Rollingnews.ie

Currently, people earning more than €352 a week pay 4% PRSI on all their earnings, although credits are available for those on low incomes.

Minister Humphreys released the Pensions Commission report in October, which recommended raising the state retirement age by three months each year from 2028 until it reaches 67 in 2031. After that, further three-month increases would be implemented every two years from 2033 until it reaches 68.

There were warnings at the time that if the system did not change, the entire social insurance fund would be used to pay the state pension, leaving nothing for other social benefits after 2040.

It was originally expected that the Cabinet would take a decision on the retirement age in March. However, this decision has been pushed back several times and there has been no official announcement on the matter yet. There were disagreements between the coalition parties over the retirement age during the government program talks.

Fianna Fáil has called for the retirement age to remain at 66 until the publication of the report of the Pensions Commission. The Green Party opposed raising the retirement age to 67, while Fine Gael argued it should be increased as planned.

Minister Humphreys released the Pensions Commission report in October, which recommended raising the state retirement age by three months each year from 2028 until it reaches 67 in 2031. Photo: Getty Images

However, at a Fianna Fáil pre-budget meeting in July, Taoiseach Micheál Martin told his TDs and senators that he now supports keeping the retirement age at 66. He said this could imply “modest” PRSI increases over time.

Mr Martin also called for “flexibility” that would allow people to retire later if they wanted to continue working beyond the age of 66. However, senior Fine Gael sources warned at the time that raising the PRSI amid a cost of living crisis would not be popular with voters.

Shortly after the Taoiseach’s remarks, Minister Humphreys said she agreed with the Taoiseach’s call for flexibility.

“We have to strike a balance here,” she said. “We need to give people options so they can make the decisions that are best for their own circumstances. There are a lot of countries that have a flexible retirement age and I think that’s a model we need to look at here in Ireland.

Sources have told the Irish Daily Mail the matter is expected to be discussed by ministers within a week.

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