The Government has announced a series of reforms to the state pension system, which will see the introduction of a new flexible pension age.

Under the new arrangement, workers who reach age 66 can choose to retire and draw the state pension or continue to work until age 70 when they will get a higher pension payment.

The measures, which were approved by cabinet, are a response to the recommendations made by the Pensions Commission.

The set of reforms accepted by cabinet include:

• Maintaining the state pension age at 66 and introducing a new flexible pension age model
• The option to continue working up until age 70 in return for a higher pension
• A move to a ‘total contributions approach’ for the calculation of individual pension entitlements on a phased basis over ten years from January 2024
• Enhanced state pension provision for long-term carers from January 2024, with time spent recognised in the pension system

The Department of Enterprise, Trade and Employment will also introduce measures that allow, but do not compel, workers to stay in employment until the state pension age. The plan says that the long-term sustainability of the state pension system will be addressed through gradual, incremental increases in social insurance rates over time, with increases in social insurance rates determined on a structured basis every five years.

The package also includes a commitment to explore ways of modifying the current benefit payment for 65-year-olds who’ve worked 40 years or more and are unable to continue working in their early 60s.

Minister Heather Humphreys described the reforms as the biggest ever structural reform of the Irish state pension.

The Government will begin to phase out the old system which allowed some workers to get a full state pension if they had worked in Ireland for just ten years from the age of 55.

By 2024 it is envisaged that each state pension will be assessed based on the total number of PRSI contributions a worker has made over a 40-year period. ICTU social policy officer Laura Bambrick welcomed the move to a total contributions approach, saying the old system did not work for people’s more complex and fractured work histories.

“Ultimately, we're committed to a contributory social insurance system. What the total contributions approach will bring us closer to is what you get out will be more closely aligned to what you have put in,” she said.

The Commission on Pensions is also recommending that people who have stayed at home to care for their children or elderly relatives should be able to receive up to 20 years of contributions for this work, on top of any paid contributions they have got from employment. provide a pension to long-term carers from 2024.

This is designed to ensure that those who worked in the home do not end up with very small state pensions.