The Social Welfare (Miscellaneous Provisions) Bill 2023, released on November 22, 2023, affirms that employees reaching 66 retain the right to claim the State pension as usual.
Acknowledging longer life spans and a preference for extended employment, the government's proposals introduce a flexible pension model. This model aims to accommodate the growing desire among employees to work longer and explore phased retirement options.
In response to concerns about the sustainability of the State pension system, the government announced a 0.1% increase in PRSI in Budget 2024.
Under the new provisions, employees continuing to work between 67 and 70 will receive an adjusted State pension rate or an increased payment based on actuarial calculations. The maximum rates for eligible employees based on retirement age and PRSI contributions are detailed as follows:
Employees opting to work past 66 will receive this increased rate and may augment their PRSI contributions.
Workforce Planning and Risks of Age Discrimination
Recent statistics from the Workplace Relations Commission reveal a surge in age discrimination claims, potentially fueled by older workers objecting to enforced retirement policies by their employers. This heightened risk, primarily due to demographic shifts, could be compounded by the introduction of the flexible pension model. Employees needing more PRSI contributions for the maximum State Contributory Pension might delay retirement. Similarly, individuals lacking pension plans or adequate retirement savings might prolong their careers under this new pension scheme.
Organisations must carefully assess their workforce planning, particularly if reliant on enforcing mandatory retirement.
Enforcement of Mandatory Retirement Ages
While the Employment Equality Acts prohibit discrimination based on age, Section 34(4) states that setting a retirement age isn't considered discriminatory.
However, organizations must justify a mandatory retirement age with objective criteria.
Accepted examples include:
Creating job opportunities for younger individuals
Maintaining motivation by enabling promotions due to retirements
Ensuring service excellence and addressing workforce age imbalances
Employers must ensure a legitimate aim for enforcing retirement ages and employ fair means to achieve this. Setting a retirement age in employment contracts, consistently enforcing it, and justifying it objectively are vital.
Handling Approaching Retirement Ages
Pension reforms might prompt more senior employees to seek extended work periods. Organisations should prepare to handle these requests, understanding the implications of deviating from established retirement policies.