Government plans to raise the State Pension age have been dealt a blow, after an Oireachtas committee recommended keeping it at 66.
The Pensions Commission has recommended controversial plans to extend the retirement age incrementally to 68, but an influential Oireachtas committee has opposed it.
The Committee on Social Protection said it is not "reasonable" for people over the age of 66 to continue working because of the physical and mental stress it may cause over a period of years.
It is also recommending "flexibility" to allow people with 40 years of contributions to receive the state pension at the age of 65.
The committee also called for a ban on mandatory retirement clauses in employment contracts.
The Pensions Commission had proposed to increase the State Pension age by three months per annum from 2028.
The pension age would then be set at 68 from 2039.
However, the Committee on Social Protection has pushed back on the recommendations.
Speaking at the launch of the report, committee cathaoirleach Denis Naughten said: “The State Pension is an important part of Ireland’s social protection measures. It helps to prevent many of those in receipt of the State Pension from entering poverty and enjoying a reasonable standard of living.”
“The committee is strongly of the view that the State Pension must be protected and that no further increases to the qualifying age should take place.”
The report comes after a request from Minster for Social Protection Heather Humphreys to consider the findings of the Pensions Commission.
A pensions plan is scheduled to go before Cabinet before the end of next month.
“We're proposing a ban on mandatory retirement and we believe that a substantial number of people will want to continue to pay PRSI contributions beyond their 66th birthday and that will have a significant impact on the drawdown of the pension,” Mr Naughten told RTÉ radio’s Morning Ireland.
The ban should not only include those starting in the workforce today but be retrospective for existing employment contracts, he added.
“We're recommending that the pension age remains as is, we've been quite critical in our report that the terms of reference given to the Pension Commission were quite narrow, that there are other aspects that should have been taken into consideration and that were not.
Evidence
“Based on the evidence we've heard there's no guarantee that increasing the pension age to 67, 68 or 69 would actually meet the deficit that would be there by 2050 or 2070.
“Because of that the Pension Commission did recommend four potential routes to go, we're going with package three which is alterations to the PRSI rates and contributions to the exchequer would alter between now and 2050 to meet the shortfall.
“We're also saying that there are projections based on the assumptions as to what the workforce will be by 2070, some of those are based on the Fiscal Advisory Council which said that participation rates by 2050 will go from 62 percent to 66.5 per cent, and the Department says there isn't room to go significantly beyond that, however, as we've seen from last week the CSO has published a report saying that participation rates are now at 65 percent because of remote working.”
Mr Naughten said that there was some evidence, based on what has happened in other EU countries, that where people were forced to retire at 65 that it could have a detrimental impact on their health, which in turn put additional demands on the health service.
“Those aspects were not taken into consideration by the Commission and we believe that they are very valid arguments in terms of the overall cost to the Exchequer.”
Mr Naughten also said that people who had worked 40 years in manual labour should not be asked to work beyond 65 where they have made their full contributions.
“The flexibility should be there, that will have a significant impact by 2050 or 2070.”
Mr Naughten denied that there would be a need for additional taxation on employees. “The Committee looked at a number of funding streams that could be available, for example, the State pays out €2.4 billion per annum in tax relief on private pensions, five percent of people who avail of that relief avail of 50 per cent of the benefit of that, so even standardising that at 33 per cent would be far more equitable, would be far more gender proof, but would actually reduce the liability the State would have and that would be a saving that could go towards the pension age.” - Additional reporting from Vivienne Clarke
