Did you know that you might have benefited to the tune of €13,000 last week? In among the 50 cent increase on cigarettes and extension of Help-to-Buy on budget day was the confirmation that the Government won’t push the State pension age up to 67 on January 1st, 2021, leaving it instead at 66. In effect, this is a windfall of sorts for those born in 1955 or after, as they’ll now get their payment of €248 a week for an extra year once they retire.

But before you plan a splurge on your 66th birthday, it’s worth considering just how long the Government can afford to allow this decision stand.

European norms

Pushing the pension age up to 67 would have brought Ireland into an elite group – and, like lockdown perhaps, not one we would necessarily want to be part of.

Germany has a plan to increase its state pension age to 67, but not until 2031

According to the Finnish Centre for Pensions for example, the norm across the European Union remains a retirement age of 65, while only two countries currently have a state pension age of 67 or more – Italy and Greece. And in some, it’s far lower; Poland and Austria have a state pension age of just 60 for women. While pension ages across the world are rising, it’s typically further into the future. Germany for example has a plan to increase its state pension age to 67, but not until 2031.

Given trends across Europe then, perhaps Ireland, with its population younger than most, didn’t need to rush so far so fast.

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Welfare payments

It’s also a misconception to believe that increasing the State pension age would proportionately relieve the burden on the State. If you retire at 65 in January for example, even though you won’t get the State pension, you can claim jobseeker’s benefit if you have at least 156 PRSI contributions up until your 66th birthday, at which point you claim the State pension. And this benefit applies until “pensionable age”, as enshrined in social welfare legislation – whatever that age might be.

Eligibility for this benefit is high. The Department of Employment Affairs and Social Protection says that some 9,750 people over the age of 62 applied for jobseeker’s benefit in 2018; of these, 9,250, or 95 per cent, were awarded the payment. Now it is paid at a lower rate – at a maximum of €203 a week, compared to €248.30 on the State pension – but it is still a burden on the State.



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