New thinking needed on pensions sustainability issue

• Pensions affordability issue does not have to mean increase in pensions age.

Responding to IFAC’s publication today, Labour spokesperson for employment affairs, Senator Marie Sherlock strongly rejected the call for an increase in the pension age to 69, saying that more research was needed into the long-term sustainability of the public finances.  

Senator Sherlock said:

“I completely reject this latest proposal to raise the pension age. Policies like this are based on a very narrow view of affordability and are totally divorced from the actual experiences of workers. If we take IFAC’s recommendation to its logical conclusion, we would have to keep raising the retirement age every few years to meet their definition of sustainability.

“This is simply unacceptable. If the report showed any understanding of the diversity of workers’ lives, it would recognise that while some workers wish to work beyond 66, others simply cannot physically do so. There is also no recognition in the IFAC publication of the enormous industrial and administrative headaches this proposal would cause for employers, especially where a difference arises between the contractual age of retirement and the age of entitlement to the state pension.

“Simply put, this proposal is neither fair nor workable and should be rejected out of hand.”

Sherlock continued:

 “Unfortunately, the IFAC analysis reflects a relatively conservative view of the future employment rate and the dependency ratio in this country.

“Instead we need to look at how we can increase the employment rate within the working age population. In particular, there is a significant cohort within the working age population who want to work, but cannot do so for a variety of reasons; caring responsibilities, disability or other factors. Before Covid-19, the unemployment rate was 16% according to the broadest measure of unemployment. This measure is based on the potential labour force within the CSO’s Labour Force Survey, Q4, 2019.

“Ireland’s unemployment level is enormous now and will remain very high over the medium term. However, over the long term, both through good times and bad, there has always been a very sizable group of people effectively locked out of the labour market.

“There is no doubt Ireland faces a challenge in meeting the costs of an aging society. But a simple hike in the pension age must not be one of them. We need more research into how we bring more people into the labour force in the future is badly needed. I believe IFAC need to incorporate such work into their research remit in the context of making recommendations on  the sustainability of our public finances.”