Employees should be offered greater flexibility in choosing their retirement age within the social insurance system through an accelerated pension savings option with PRSI contributions, said Ms Eithne Fitzgerald. Examining international evidence linking social security pensions and early retirement in the latest edition of Irish Banking Review, the TCD social sciences lecturer found a steady trend towards earlier retirement by men in most developed countries over the past 40 years.

Unlike most other developed countries, Ms Fitzgerald found Irish social security pensions were not linked to previous earnings and fewer than half the workforce was in earnings-related pension schemes at work.

People should have choices on when to retire, said Ms Fitzgerald. "At present, the only formal early retirement option is means-tested, unless a relaxed attitude is taken to availability or incapacity for work conditions of other payments. An alternative would be to introduce an actuarially fair social insurance early retirement pension."

This could be achieved either through heavier saving during working years or opting for a reduced pension. She accepted the reduced pension route ran the risk of inadequate income in old age. Employees could be offered a facility similar to the additional voluntary contributions facility available in most private sector pension schemes, she advised.

These savings could be deducted through the PRSI system and the funds invested by the National Treasury Management Agency alongside the existing National Pension Reserve Fund. This would provide a low-cost way to save for extra pension flexibility, she said.