- “Don’t Force Thousands of 65 year olds’ onto “Job Seeker” Benefit in 2014”
The Irish Association of Pensions funds today hold a pension benefits seminar titled "Mind The Gap!" in the Radisson Blu, Golden Lane, Dublin to examine the impact of the planned change in retirement age in Ireland on pension scheme design, employment law, on individual members.
With State Pension Age effectively due to rise to 66 in 2014, the Irish Association of Pension Funds seminar will look at what will happen to those unfortunate enough to have been born between January and December 1949 and were scheduled to “put down their shovels” in 2014. Unlike those just a few months older, these individuals will lose almost €12,000 - representing 12 months of payments due to be paid out under the State Transition Pension scheme, which is normally paid for one year from 65 to 66 when the Non-Contributory State Pension commences.
According to Jerry Moriarty, CEO of the IAPF, “These payments are not being deferred, they are being withheld and ultimately these would-be pensioners will never make up for that. There has been little in the way of guidance or policy on the matter from the Department of Social Protection and we are now calling on the Government to work with the representative bodies to come up with a series of guidelines for employers and information on alternatives for individuals nearing retirement. The alternatives could include a slightly reduced pension for those who need to take it at 65 which would seem preferable to going through the charade of applying for Job Seekers’ allowance”.
According to the IAPF Ireland isn’t the only country raising its retirement age - in the UK the pension age will jump from 65 to 68 by 2020, while Australia, the US and Germany are all set to increase their pension age to 67 over the coming years.
Jerry continued “Greater life expectancy makes it logical to move retirement out as we live longer, but the practicalities of implementing this change are pretty stark for the first 14,000 people that will to be affected. It will invariably mean that anyone planning to retire in 2014 will receive one year’s less State pension that those slightly older, even though they’ll still have worked their 40 years. There is a dearth of information on how employers and individuals should plan for this potential income gap and we want the Department of Social Protection to issue guidelines to ensure that this is implemented in a fair and consistent manner – the IAPF are happy to assist in drafting these guidelines”.
According to Fiona Thornton, Partner and Head of Pensions and Employee Benefits practice, LK Shields Solicitors and one of the speakers at the event, “We have an 18 month planning window to address the potential uncertainties and legal complexities that this change in the State pension age is going to generate. There needs to be an awareness amongst trustees, employers and individuals of the likely major impact for their pension schemes, work force and individual circumstances and at the moment the need to address these issues is not being communicated.”
The pension body content that because not everyone is lucky enough to have a financially strong employer that will smooth the financial transition for them, a huge proportion of workers may struggle to provide an income for themselves after 65 if their employer doesn’t extend their employment or if they are self-employed.
Jerry went on to say, “Essentially, what this means is that those individuals who are left without an income for the gap year will have to apply for Jobs Seekers allowance, though the self-employed may be excluded from this benefit. It will be interesting to see whether the new “available for work” job seeker rules will be applied to these 65 year olds. Would-be retirees have yet to receive any official notice from the department to plan for a substantial €12,000 income loss.
According to Joan Burton, Minister, Department of Social Protection, almost €154m will be paid out in State Transition Pension in 2012 and it would be expected a similar amount will
be budgeted for 2013. As the Transition Pension is just paid for one year (from 65 to 66), it’s this benefit that will be axed. It presently represents just under 14% of the total Non-Contributory pension payments”.
Note to the Editor
Established in 1973, the Irish Association of Pension Funds (IAPF) is a non- profit, non-commercial organisation whose aim is to promote financial security for all retired people.