State Pension - deferral proposal, up to age 70

[Steven Barrett]

Ive seen comments about this proposal with people mentioning losing out on money as you are not claiming the pension.. but you could say that about every social welfare payment..
eg if im unemployed for 10 years vs being employed for thise 10 years I dont get the social welfare payments..but personally i dont feel that im missing out..
In my situation asof now my mortgage will end in my lates 60s..
If i can continue to work on reasonable salary, make AVCs then to me thats a good thing.. better than being forced to retire..
I genuinely dont understand the negativity around this

You don't have to retire when you get the State pension.

And having a private pension gives you choices. You are not reliant on when the state says you can retire and how much you can live on. Lots of people will be reliant. Some because they never had the disposal income to put into a pension. Others because they preferred to spend the money while they worked and didn't put anything away.

the issue of deferring the pension is simply looking at when the higher rate will have paid out more than the ordinary rate. For those who take the OAP after 66, they will be 88 years of age before the higher rate has paid out more in total. The life expectancy of neither a man or a woman taking the OAP at any of those age will get the average person to age 88.

 

[dubdub123]

You don't have to retire when you get the State pension.

And having a private pension gives you choices. You are not reliant on when the state says you can retire and how much you can live on. Lots of people will be reliant. Some because they never had the disposal income to put into a pension. Others because they preferred to spend the money while they worked and didn't put anything away.

the issue of deferring the pension is simply looking at when the higher rate will have paid out more than the ordinary rate. For those who take the OAP after 66, they will be 88 years of age before the higher rate has paid out more in total. The life expectancy of neither a man or a woman taking the OAP at any of those age will get the average person to age 88.

Ah ok.. i was thinking this would only kick in on retirement. Honestly that seems bit mad to be paying state funded pension to someone who is still working.. and could be on a pretty high salary.. i was thinking of it as an either/or situation regarding working or state pension. I actually never realised it could be drawn down before retirement
In thst case, yeah.. people will take the pension at earliest age to have the money in hand.

 

[Protocol]

We live in a free society.

You are free to work as much as you like after you qualify for the State Pension.

My father is 75 approx, and has several employments, while receiving a PS pension.

I'm sure there are thousands upon thousands of people aged 66-70 in employment, of various types, and self-employment, while receiving the State Pension.

 

[Clamball]

My company insists everyone retires at 65. They say this is because it is in the contract of employment signed. Therefore there is no option to work beyond 65. My company cannot be unique so with this proposed optional increase in drawdown of state pension will they make it illegal for companies to have a retirement date on contracts of employment?

 

[ryaner]

My company insists everyone retires at 65. They say this is because it is in the contract of employment signed. Therefore there is no option to work beyond 65. My company cannot be unique so with this proposed optional increase in drawdown of state pension will they make it illegal for companies to have a retirement date on contracts of employment?

There have been a few attempts to get a law passed to remove the restriction since the original pension age jumped to 66. Any job I've seen with a pension provided has had a retirement age which I assume is tied to the retirement benefits and insurances those policies all provide.

 

[joe sod]

I think the one big advantage of the mandatory 65 retirement age is that it kicks people out at that age and allows younger more vigorous people into these crucial decision making roles. I agree that people should be able to work beyond 65 but they shouldn't be allowed to hold onto prestigious highly paid and sought after roles simply because the mandatory retirement age has been removed, This will only result in the organisation stagnating as people wait for the person at the top to reach 70 so they can move up. It would be like Prince Charles having to wait for the Queen to die before he can progress

 

[Clamball]

It is just very frustrating that I will be unable to work from the age of 65 in a career I have invested decades in and if I want to work to age 70, I am going to encounter ageism (like from Joe Sod above).

It is akin to the marriage ban that my mother encountered in the 60’s. Females had to stop work on marriage to kick out potential mothers who would be less vigorous than males of the same age as they would have the added responsibility of house and family.

If the government want to encourage me to work for longer why not make it illegal for companies to adhere to retirement dates in contracts.

 

[NoRegretsCoyote]

My company insists everyone retires at 65. They say this is because it is in the contract of employment signed. Therefore there is no option to work beyond 65.

The UK has apparently legislated this away.

Employers like this clause at a certain point they want to be able to get rid of staff they don't want.

It's easier to oblige everyone to retire and the re-hire the ones you like than the other way around.

 

[Groucho]

I think the one big advantage of the mandatory 65 retirement age is that it kicks people out at that age and allows younger more vigorous people into these crucial decision making roles. I agree that people should be able to work beyond 65 but they shouldn't be allowed to hold onto prestigious highly paid and sought after roles simply because the mandatory retirement age has been removed, This will only result in the organisation stagnating as people wait for the person at the top to reach 70 so they can move up. It would be like Prince Charles having to wait for the Queen to die before he can progress

So where do you stand on the 81 year old Michael Dee Higgins?

Or indeed on the 69 year old semi demi leaderette of the Soc Dems? At least her fellow semi-demi leaderette is only 68!

 

[Steven Barrett]

There have been a few attempts to get a law passed to remove the restriction since the original pension age jumped to 66. Any job I've seen with a pension provided has had a retirement age which I assume is tied to the retirement benefits and insurances those policies all provide.

There is a difference between an employer saying you have to leave the position at age 65 and the pension having a retirement age of 65. All pension schemes have to have "normal retirement age". Pension funding calculations are based on this age and the employer is obligated to make contributions to this age. It is entirely possible that an employer can stop paying into your pension scheme when you reach age 65 but you continue to work in the company.

I think the one big advantage of the mandatory 65 retirement age is that it kicks people out at that age and allows younger more vigorous people into these crucial decision making roles. I agree that people should be able to work beyond 65 but they shouldn't be allowed to hold onto prestigious highly paid and sought after roles simply because the mandatory retirement age has been removed, This will only result in the organisation stagnating as people wait for the person at the top to reach 70 so they can move up. It would be like Prince Charles having to wait for the Queen to die before he can progress

This very much depends on the person and the industry. Yes, there are roles where the person's output is reduced. People get tired. Ways of doing things change and as you get older, you don't change as quickly as others. But then there are loads of jobs where decades of experience is invaluable. It's a difficult needle to thread as companies shouldn't be forced to give a 60+ employee a pay off to get them off the books. Likewise, the way we work has changed now and people want to work longer.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[joe sod]

So where do you stand on the 81 year old Michael Dee Higgins?

Or indeed on the 69 year old semi demi leaderette of the Soc Dems? At least her fellow semi-demi leaderette is only 68!

That's different because they are elected by the people or by their contemporaries. What I am saying is that companies or organisations should not be compelled by laws to keep people in sought after positions simply because the mandatory retirement age has been removed.
Its unfair on the people that are coming up as they might miss out on a promotion simply because they are waiting for the occupier of that position to retire and the company can not remove them. The whole decision making process will just stagnate as these people will just be sitting around waiting for retirement.

All and all though I think the danger for Ireland is that we are becoming overly regulated and this has been an increasing tendancy especially since covid. We have to remember that the bread and butter of our economy is FDI

 

[Groucho]

That's different because they are elected by the people or by their contemporaries. What I am saying is that companies or organisations should not be compelled by laws to keep people in sought after positions simply because the mandatory retirement age has been removed.
Its unfair on the people that are coming up as they might miss out on a promotion simply because they are waiting for the occupier of that position to retire and the company can not remove them. The whole decision making process will just stagnate as these people will just be sitting around waiting for retirement.

All and all though I think the danger for Ireland is that we are becoming overly regulated and this has been an increasing tendancy especially since covid. We have to remember that the bread and butter of our economy is FDI

But that appears to fly in the face of your earlier statement (with which I agree) that mandatory retirement ages "allow younger more vigorous people into these crucial decision making roles." (But perhaps you don't regard opposition politicians as having any such role!)

 

[ryaner]

There is a difference between an employer saying you have to leave the position at age 65 and the pension having a retirement age of 65. All pension schemes have to have "normal retirement age". Pension funding calculations are based on this age and the employer is obligated to make contributions to this age. It is entirely possible that an employer can stop paying into your pension scheme when you reach age 65 but you continue to work in the company.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

While there should be one, lots of contracts were written in a way that their isn't. More than a few employers got into a situation where the contracts are forcing retirements because the retirement age is hit and the insurance lapses at that age.

 

[murphaph1]

Assuming we move to a TCA only by the time I reach retirement age and I have say 39 years of PRSI contributions, would it make more sense to take the 39/40ths of the COAP at 66 or defer until 67 and then get 40/40ths? My quick calculation suggests in current terms 1/40th of the pension is worth €329 a year so it would take approx. 13156/329 = 40 years to recoup the lost ca. 13k in the year following my 66th birthday? That seems like a really bad deal even for people short of stamps in the TCA world. Is this a correct assessment? This is not a contrived example by the way. As things stand I will have 39 years contributions when I turn 66. They will probably have increased the retirement age to 67 by then anyway (I'm 45 this year) thus "solving" my problem for me!

 

[Dave Vanian]

Assuming we move to a TCA only by the time I reach retirement age and I have say 39 years of PRSI contributions, would it make more sense to take the 39/40ths of the COAP at 66 or defer until 67 and then get 40/40ths? My quick calculation suggests in current terms 1/40th of the pension is worth €329 a year so it would take approx. 13156/329 = 40 years to recoup the lost ca. 13k in the year following my 66th birthday? That seems like a really bad deal even for people short of stamps in the TCA world. Is this a correct assessment? This is not a contrived example by the way. As things stand I will have 39 years contributions when I turn 66. They will probably have increased the retirement age to 67 by then anyway (I'm 45 this year) thus "solving" my problem for me!

I don't think it will change the conclusion but wouldn't you actually get a higher pension at 67 than at 66? I can't remember what the addition was but as well as getting you up to 40/40ths in your example, you'd get a higher rate of pension at 67 than 66. But I do recall working out a few examples and even taking this into account it was a poor increase for giving up a year's worth of pension.

 

[murphaph1]

Oh yeah I forgot that the deferred pension would also be increased slightly. I think the "payback period" was calculated to be 20 years for people who already had the full 40 years contributions so I guess if I split the difference it would be about a 30 year payback period for me, which remains a really bad deal as I can surely use the money in my mid-sixties a lot more than in my mid-nineties, if I was even to reach that age. I guess the best course of action is to draw the COAP as soon as I am eligible.

 

[Dave Vanian]

Reading back through this thread, Cliff Taylor in the Irish Times suggested that the increase in pension might be of the order of 4% per year deferred.

So using current rates of the pension, full rate at 66 is €13,795.

If you had 39/40 at 66, you'd get €13,451.

If you waited until 67 you'd have €13,795 + 4% so €14,347. An increase of €896 per year at a cost of €13,451. So it would take you about 15 years to break even.

 

[murphaph1]

Nice one Dave, so I'd be around 82 before break even. I still think a bird in the 66 year old's hand is worth two in the 82 year old's bush!

 

[SPC100]

The time value of money would mean the break-even would be much later.