Pensions have become the surprise general election issue. But surprising perhaps only because they so rarely feature in elections.
For the past six years, a large cohort of people has retired at 65 to find that they cannot access their State pension until they turn 66. From next year, that gap widens to 67. Jobseekers’ benefit is available but only for nine months and at a rate 20 per cent less than the pension – and many people baulk at turning to welfare after paying towards a pension all their working lives. After nine months, it gets worse: only means tested welfare is available. So people find themselves dramatically worse off than they expected in an economy that is one of the best performers in Europe.
The underlying issue is that Ireland, in common with other countries, will struggle to meet the cost of pensions in future years as its population ages. There are essentially three ways to address this – work for longer, pay higher PRSI or receive a lower pension. The State opted for the first but took no steps to ensure private sector employers amended their employment contracts to reflect older retirement dates.
Reintroducing a transition pension simply to make the problem disappear dodges the underlying problem
Central Statistics Office research published earlier this month shows close to 40 per cent of private-sector workers will rely solely on the State pension in retirement. In real numbers, that means around 600,000 voters (and their families) will find themselves in a kind of limbo. There should be little surprise the issue has been raised with canvassers on so many doorsteps.
Some people object to working longer but, for most, the problem is that they will not be allowed to do so. They are forced by company contracts to retire at 65 but will also be barred from accessing the State pension. Meanwhile, a supplementary pension will provide a safety net for most public servants of the same age. The system is clearly inequitable and needs reform. But playing auction politics is not the answer. And reintroducing a transition pension simply to make the problem disappear dodges the underlying affordability problem, adds cost and turns back the clock on the limited reform we have seen.