Workers who work beyond their usual retirement age and defer collecting the State pension could receive enhanced retirement benefits, under proposals being considered by the Government to ensure a sustainable pensions regime.
Addressing a Workplace Relations Commission conference today, the Assistant Secretary at the Department of Employment Affairs and Social Protection Tim Duggan said Ireland was "heading into a storm" because of its massive pension liabilities which would have to be addressed.
He said the state pension is currently costing €7.5 billion annually, but that liability is rising by €200 million a year as 17,000 more workers retire annually.
Mr Duggan also noted that the number of pensioners is set to double over the next 30 years, but the ratio of workers to fund pensions would be halved.
He warned that the Social Insurance Fund which pays out the State pension will be in deficit by 2020, and that deficit could rise to hundreds of billions of euros over the coming years.
He noted that there is no legal mandatory retirement age in Ireland, but there was a need to move away from the "cultural" norm of 65 and to give workers more flexibility about working for longer.
This would allow those who were already entitled to the full State pension at retirement age to get a bigger pension if they worked and contributed for longer.
The right to work for longer would also assist those who could not accumulate sufficient contributions by the usual retirement age.
Mr Duggan acknowledged that a voluntary approach to supplementary pension provision had failed - and confirmed that the Government is planning to introduce an auto-enrolment pension scheme by 2022 to encourage workers to provide for their retirement over and above the state pension.
He said the new scheme would include workers who were self-employed, part-time or working for multiple employers - and cited incentives for older people to work beyond 65, including not paying PRSI, a reduced PRSI rate for the employer, a lower USC contribution, and increased tax credits.
However, he warned that Government plans to make pensions more sustainable through the auto-enrolment system would "fail and fail miserably" if politicians "chop and change" policy every time there is an election and a change of administration.
Speaking at the same conference, ICTU General Secretary Patricia King queried why the Government was extending PRSI benefits for self-employed people who only pay 4% PRSI if the overall funding position was so serious.
She said the Government should focus on tackling bogus self-employment, which was draining PRSI out of the system.
