Election 2020: Governments may be forced into ‘freezing pensions’

A future government could be forced into "freezing pensions" of people working now unless changes are made on the statutory age of retirement, Leo Varadkar has warned.

The Taoiseach has accused political opponents of potentially “auctioning off the pensions of the young” in the “white heat” of an election campaign.

Next year’s extension of the State pension age by another year to 67, depriving those who retire at 65 of the right to their full pension for two years, has become a major election issue.

Political parties are promising changes to the phased increase in the pension age introduced in 2014 to reduce the cost of the State’s pension bill, which will rise over the coming decades as the population gets older and the ratio of working-age people to pensioners fall.

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If re-elected to government, Fine Gael would allow people to retire at the age of 66 on a full State pension, as long as they actually stopped working, he said.

But the party would have to “sit down” with trade unions and employers to work out whether any changes be made to a planned pushing out of the pension age to 68 in eight years time.

“If reelected to government, this will be the first legislation we put through the new Dáil, an amendment to Social Welfare and Pensions Act, and that will allow people who are 66, who either have to retire or want to retire, to retire at 66,” Mr Varadkar told RTÉ’s Today with Sean O’Rourke.

“And people at 65 won’t have to sign on [the dole] anymore.”

Means-tested

Mr Varadkar said the pension at the age of 66 will not be means-tested and will be calculated on PRSI contributions.

“The only difference, I suppose, will be that we won’t pay it to people who are working full time, so you do have to retire,” he said.

Workers who retire at the age of 65 “will get what they have been getting since 2014” – 40 euro less a week than the full statutory pension, under a new Fine Gael-led government, Mr Varadkar said.

“I appreciate what we are offering is less than what the other parties are offering on this,” he said.

“But I’m concerned at what’s happening on this issue in the white heat of an election is an auction – and an auction that could result in us auctioning off the pensions of the young.”

Mr Varadkar said the number of pensioners in Ireland is increasing faster than the number of workers, and changes are necessary to "deal with a problem before it becomes a crisis."

“So if we don’t do something about it now, we’ll end up having to do much more radical reforms in the future which could mean freezing pensions,” he said.

“It could mean younger people now in their thirties, forties and fifties – even late fifties – paying into a pension all their lives, paying PRSI, and finding out that the pension isn’t there for them.”

Mr Varadkar said proposals by other parties to reinstate full pensions at 65 were “reckless”.