Retirement report “useless window dressing”

One of the country’s most influential trade union leaders has dismissed the Government’s report on the retirement age as “useless window dressing.”

The report published last Friday sought to work out ways to bridge the gap between the age at which people tend to retire and when they become eligible for the state pension. Many people retire at 65 or earlier, but the state pension is not payable until they are 66.

Minister for Public Expenditure and Reform Paschal Donohoe said the Government would encourage the private sector to allow workers to continue in employment beyond the traditional “normal” retirement age of 65. He said his department and public service employers would also review “barriers to extended participation in the public service workforce”.

The president of Siptu, Jack O’Connor, said the report had completely failed to address the plight of older workers approaching mandatory retirement age.

He said that such workers had been left high and dry by the abolition two years ago of the transitional pension which catered for people between 65 and 66. The state pension is currently payable at 66, but the qualifying age will be pushed out to 67 in five years’ time and to 68 by the year 2028.

“Siptu has repeatedly called for an increase in job seeker’s benefit at 65 as a temporary measure to deal with this problem. Such a provision would cost as little as €5 million a year to cover those forced to retire at 65 and just €25 million for all 65-year-olds who are dependent on the social welfare system,” said Mr O’Connor.

He added that the longterm solution involved the abolition of the mandatory retirement age to allow people wishing to work on, to do so, while still making provision for people in hazardous and heavy manual occupations to retire at 65.

“This useless report also ignores the elephant in the room which is the requirement for the introduction of a mandatory second pillar pension scheme for all workers who are not already in proper occupational schemes.

“Ireland is virtually unique in the developed world for the absence of such a scheme, which would require mandatory contributions by employers, government and employees. Instead of abolishing the Universal Social Charge, we should be redeploying it in this direction,” said Mr O’Connor.

He said the increase in the qualifying age for the State old age pension to 67 should be deferred to 2028, to allow for new second pillar arrangements to become effective. He also called for the scheduled increase in the qualifying age to 68 in 2028 to be deferred until this became the norm in eurozone countries.

“The report also fails to address the implications of the impact of the collapse of sovereign bond yields on occupational pension schemes. We are now in the absurd situation that several perfectly viable schemes involving tens of thousands of members may be unable to meet the regulatory minimum funding standard.

“This will result in catastrophic losses for the workers affected if these schemes are, quite unnecessarily, forced to close,” he said.

Mr O’Connor said a major crisis was unfolding in the retirement and pensions arena and if it was not tackled would ultimately rank second only to the banking crisis of 2008 in terms of severity and economic implications.

“We deserve more from our elected legislators than the kind of hand wringing that is displayed in this useless report,” he said.