As watchdog recommends that we work until age 69, what are the issues facing us?

Q: Why has the pension age become a hot topic again?

A: The controversial issue of the age at which people qualify for the State pension flared up again this week when the State's budget watchdog weighed into the debate and recommended that people work until they are 69 before drawing down the contributory pension.

The Irish Fiscal Advisory Council argues that the population is young now by European standards but we are ageing rapidly. Rising healthcare costs also mean measures are needed to deal with the increasing cost of an older population.

Q: What is the problem?

A: Among people who don't have a personal or occupational pension scheme in place, 60pc say they intend to rely on the State pension when they retire, according to Central Statistics Office research. Plans to raise the State pension age were one of the key issues in this year's general election.

People are furious that they will have to wait so long for something they have been contributing to for 40 years or more.

But economists say that in the next 30 years, the percentage of the population over the age of 65 will rise from 14pc at the moment to 27pc, almost doubling.

Around half of the debt burden by 2050 will reflect unfunded ageing costs, the Fiscal Council calculates.

Under current legislation, eligibility for the State pension is due to increase from age 66 to 67 with effect from January 1 next, and then to age 68 in 2028.

This is because the then Fine Gael-Labour coalition legislated in 2011 for the phased increase in the age at which people could access the State pension.

The age was increased to 66 for those retiring from 2014, and 67 from January.

Because the proposed increase in the pension age was a massive issue during the general election campaign it was agreed in the Programme for Government that the increase in January be deferred. This is pending a report from the Commission on Pensions, which will examine the sustainability of and eligibility for the State pension.

But Government will now need to legislate to avoid the rise in the State pension age to 67 next January.

Q: How will this affect people?

A: The decision to defer the rise to 67 for those retiring from January means people who have reached the age of 66 and are retiring next year will now qualify for the State pension.

They will not have to claim Jobseekers' Benefit, which is paid for 12 months from age 65 to 66 at the moment.

Q: What happens now?

A: What happens for people retiring from 2022 on is anyone's guess. We will have to wait for the Government to implement the recommendations of the Commission on Pensions, which has yet to be set up. It is due to report by June next year.

Q: What can I do?

A: One way or the other the qualification age for the State pension will rise. Almost one million workers have no supplementary or works pensions, with most set to rely on the State pension. There are plans to introduce an auto-enrolment scheme for these people, which would ease the financial pressure in retirement. But the implementation date for this has been knocked back repeatedly. It is expected the Commission on Pensions will insist the auto-enrolment pension is introduced in the next two years, as was previously planned.

Those in a pension scheme should make sure to keep paying contributions, and actually up them if they can afford it. Those in their 50s and 60s, who are not lucky enough to have a public sector pension, should do AVCs (additional voluntary contributions).

This might even allow for retirement in their mid-60s rather than the suggested 69.

Q: But can I keep working into my 70s?

A: Many workers' employment contracts specify a retirement age of 65. As things currently stand they will not get the State pension until they are 66. But if you are able to keep working there is nothing to stop you doing that, but you won't get the State pension until the qualifying age.

There is no legal obligation to retire at 66. The employer must be able to justify it, according to chief executive of the Irish Association of Pension Funds Jerry Moriarty.

Some workers, like gardaí and firefighters, get to retire early. But any public servants employed since 2013 still have to wait until the official State pension qualifying age to get the State pension. Public servants employed before 1995 do not get a State pension.

Q: Are there alternatives to raising the age people qualify for the State pension?

A: Jerry Moriarty of the Irish Association of Pension Funds said just because the maths support arguments for raising the State pension qualification age does not mean we should go there.

Mr Moriarty, whose organisation represents trustees of company schemes, said the issue is also about people and how they live their lives.

Irish Congress of Trade Unions social policy officer Laura Bambrick said we need to equally focus on the lack of money going in to the State's coffers to pay for pensions, and not just the money going out.

And Dr Bambrick said there was a need to introduce a flexible qualifying age for the State pension to take account of different ages when entering full-time employment between manual and college-educated professionals, and differences in life expectancy between social classes. She also called for higher PRSI contributions to be paid by employers.

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