Recommendation to raise State pension age to be passed to another commission

The recommendation is now to be examined by the Tax and Welfare Commission that it is not due to report until next summer.

This effectively means a Government-appointed commission would consider a recommendation from another Government-appointed commission.

The Pensions Commission report, which was formally published on Thursday, also recommends that there should be greater flexibility around when people get the State pension.

This would mean that those who started working early in their lives would have the option to retire at age 65, which earlier than the current State pension age of 66.

And those who want to keep working should be able continue to build up pension credits up to age 70, it recommends.

As previously reported by this publication, the key recommendation is that the State pension age will not reach 67 until 2031.

This delay in raising the State pension age would be funded by higher PRSI payments.

After 2031, the pension age should rise gradually to 68 by 2039, it is recommended.

The report, which was discussed by Cabinet, also recommends that pension provision for long-term carers be enhanced.

Years spent out of the workforce when providing care will be recognised to ensure they get more PRSI credit to take them closer to a full pension.

The Pensions Commission also recommends:

• Indexing the State pension payment so it keeps pace with inflation and earnings growth.
• An independent body should regularly review the impact of benchmarked increases to ensure they are effective in preventing pensioner poverty.
• A “full transition” to a method of assessing entitlements known as the total contributions approach “should be implemented as soon as possible”. Under current arrangements, people can qualify for a full pension after 10 years. The amount they get is based on average yearly contributions. For those better off with the current method, the report endorses a phased transition over a 10-year period. This is likely to mean workers must make 40 years of social insurance contributions to get a full State pension.
• The report also endorses the auto-enrolment for supplemental pension provision.
• Employment contracts should be aligned with the State pension age.

The report recommends self-employed people should bear the brunt initially of higher PRSI as they would see their contributions soar from 4pc to 11pc in the coming years.

The move would impact up to 331,000 people who are self-employed in the state.

The self-employed would see the PSRI hikes first. Their rate would rise from 4pc to 10pc initially by 2030.

It would move to a higher rate – that now stands at 11pc – before jumping another 2.4pc by 2040 and 0.1pc by 2050.