Irish Minister for Social Protection, Heather Humphreys, has announced “landmark” reforms to the state pension system in Ireland, with a new ‘flexible’ system to be introduced.

Under the new system, which will be introduced in January 2024, the state pension age will remain at 66 but people will have the option to continue working until the age of 70 in return for a higher pension.

As recommended by the Pensions Commission, the state pension will move to a ‘total contributions approach’ for the calculation of individual pension entitlements on a phased basis over 10 years, starting in January 2024.

There will be enhanced state pension provision for long-term carers, meaning that people who have to give up work for an extended period of time to care for a loved one will have their time spent caring recognised in the new system.

The Department of Enterprise, Trade and Employment will introduce measures that allow, but do not compel, an employee to stay in work until the state pension age, while workers will be provided with access to a PRSI contribution statement service each year to help them understand their entitlements.

Meanwhile, social insurance rates will gradually and incrementally increase over time and their level will be determined on a structured basis every five years, informed by a statutory actuarial review.

The government has also committed to exploring the design of a scheme that would modify the current benefit payment for 65-year-olds to provide a benefit payment for people who, after a working life of 40 years or more, are not in a position to remain working in their early 60s.

“The measures agreed by Cabinet today represent the biggest ever structural reform of the Irish state pension system,” commented Humphreys.

“We know that people are living longer and healthier lives which is hugely positive. At the same time, everybody’s job and circumstances are different so we need to move away from a ‘one size fits all’ approach to the pension age.

“That is why from 2024, Ireland will move to a new ‘flexible pension age’ model, similar to the systems in place in a number of other EU countries.

“This new system will put the power in people’s hands and give them the choice in terms of what best suits their own circumstances.

“I’m pleased too that government has agreed to a number of other really important proposals.

“Over the next 10 years, as recommended by the Pensions Commission, we will move to a total contributions approach, ensuring that people’s pension rates are based on the number of years they have worked and paid contributions.

“This will be a crucial step in ensuring our state pension system is sustainable into the future and will help deliver a more fair and equitable system for our citizens.

“The state pension system is extremely effective at ensuring that our pensioners do not experience poverty. The decisions taken by government today will ensure that this remains the case for both current pensioners and today’s young workers – tomorrow’s pensioners.”

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