Age Action warns of 'poverty trap' dangers

LOBBY GROUPS:PROPOSALS TO raise the age at which people qualify for the State pension could create a "poverty trap", Age Action has warned.

Spokesman Eamon Timmins said he believed the proposals would leave many coming close to retirement having to draw from their own resources for the years in which they could have expected to draw the State pension.

That could stretch to three years in the future under the National Pensions Framework announced by the Government yesterday which will see the minimum age to draw the State pension rising to 68 by 2028.

Mr Timmins said it was “imperative” that the Government provides alternative employment training schemes to those coming close to retirement who are affected by the change of policy.

“Otherwise the big losers will be older workers – those in their late 50s and early 60s,” he warned.

“Many people currently working in the private sector have signed contracts to retire at 65, but they may not be able to draw down their State pension until they are 66, 67 or 68.”

Age Action also expressed concern at the Government’s commitment to keep the value of the State pension at 35 per cent of average earnings.

“For the current generation of pensioners – half of whom are dependent on the State pension for their income – this means their income will hover around the poverty line for the rest of their lives,” Mr Timmins said.

Older and Bolder, the alliance of seven non-governmental organisations in the age sector, criticised the framework plan for not making provision for those who want to retire earlier.

Its project director, Patricia Conboy, said the fact that these provisions will start as soon as 2014 would leave many people coming close to retirement in a difficult position.

“The Government’s decision to change the pension qualifying age for older people makes no provision for individual choice and flexibility and the lead-in time for this major change is very short – for older people and for employers,” she explained.

The umbrella organisation, which includes Active Retirement Ireland, the Carers’ Association, and the Irish Hospice Foundation among its members, said that the pension changes were occurring at a particular time “when mandatory retirement ages remain in place and when ageism is a reported reality in many workplaces”.

Older and Bolder also expressed disappointment that the Government had not made a commitment to raise the State pension from 35 per cent of gross industrial earnings to a minimum of 40 per cent of it, as has been previously recommended by the Pensions Board.

Ms Conboy said: “We will be analysing the proposals for a supplementary pension scheme and for auto enrolment in greater detail over the coming days.

“There has to be an immediate concern about the capacity of the private pension system to provide older people with secure and reliable pension income.

“With real losses of 37.5 per cent in 2008, Irish private pensions were the worst-performing in the 30 OECD countries”.

Irish Senior Citizens Parliament (ISCP) chief executive Máiréad Hayes welcomed the framework but also expressed her concern over the increase in the minimum age for the non-contributory State pension.

“The parliament has always been of the view that any increase in the age of retirement should be voluntary, with choices available to the person based on what is best for them,” she said.

“While we support the option to allow people to continue working longer, the mandatory age increase may not fully take the individual health and wellbeing of older people into consideration.”