State Pension - deferral proposal, up to age 70

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fayf

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Any thoughts on this, appreciate its only a proposal, right now.
www.rte.ie

Workers could defer pension under 'flexible' plan

The age at which people receive the State pension is set to remain at 66 under plans set to be finalised by the Government in the autumn.
www.rte.ie www.rte.ie

So, main items for people who want to, and are able to work the extra 1, 2, 3, or 4 years, is, what extra payment they will get.

Does this mean PRSI no longer ceases at aged 66 like it currently does. but continues until 70.

People who start drawing their ARF or other pension, at say aged 65, and qualify for the state contributory pension, presumably these will not be excluded, from availing of deferral of state contributory pension allthough they may continue to contribute PRSI from 66 to 70, if PRSI is extended.

So, lets say state contributory pension is a rounded 13k, and one defers the full 4 years, thats 52k in total, that one did not get, so a full 4 year deferal, would need to be at least amount to few extra grand per year, if deferred until 70.

Granted, many other factors, like allowing people who want to work longer, and many social benefits for them.
 
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The announcement really raises so many questions that it’s hard to know what to make of it.

I guess we’ll just have to wait for the detail.
 
One of the main benefits to this is for people who don't have the required level of stamps at age 66. They can carry on working to get the full pension. For those who have accumulated the full amount of stamps, it is hard to see the benefit in deferring the State pension. If the higher amount outpays the standard amount, it will be in your 90's when you probably won't care too much.

The whole thing reeks of political maneuvering. The State pension was set to be paid at age 67 and increase gradually over the years. It was all set in line with life expectancy so each generation got paid the State pension for the same amount of time (on average). This was announced years ago. And then it became an election issue. And now it is a mess. We can't afford to pay pensions from 66 indefinitely so now there is going to be a PRSI increase to cover the costs.


Steven
www.bluewaterfp.ie
 
The pension time bomb keeps ticking.
Word is with high inflation the powers that be have pushed Pension Auto Enrollment down the road yet again.
It will not be fun if/when our new found wealth from Corporation Tax dries up.
 
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19% of men, 12% of women die before they reach the age of 65.
I wonder where their contributions go?.
 
This will not be seen as rewarding people who work until 70 - it will be seen as penalizing people who don't work until 70. The attraction for government seems to be they see it as a cheap way to get the retirement age back to 65 (which I don't think was the commission's idea).

Most people won't work until 70 despite the spin about people being "allowed" to work - most people want to be "allowed" retire at an age where they've a few years where they're healthy and active.

For example the chair of the pension commission proposing this new plan retired on a substantial pension at 57 from Revenue - I'm sure she'd have been "allowed" work longer. A very able woman by all accounts - and great she's keeping busy - if only there were enough government board memberships to keep everyone's mind moderately active in retirement. Who needs sudoko if you one can land one of these?
 
I'm Nobody said:
19% of men, 12% of women die before they reach the age of 65.
I wonder where their contributions go?.
Click to expand...
Their contributions are used to pay the pensions of those who receive pensions at the time

A lot of people think that their PRSI contributions are put aside into a cookie jar to pay THEIR pension when they retire - this is not the case.
All PRSI contributions are used to pay the pensions and other social welfare payments immediately

Pensions are paid from the contributions of those working - at the moment there are 4-5 workers paying in per pension being paid out but in 20 years it will be 2-3 workers paying in per pension being paid out. Something will have to give - either higher PRSI, lower pension or longer working life or a combination of these
 
fayf said:
Any thoughts on this, appreciate its only a proposal, right now.
Click to expand...
So, say you qualify for the full state pension and choose to work extra years after 66 then you get paid more, fair enough.

I hope that applies to those who worked extra years early in their careers. I started work at 16, when I reach 66 I will have nearly 50 years of contributions, that's almost 10 years more than the required amount for the full state pension.

I understand the person claiming at 70 will be claiming for 4 years less, but if what’s proposed is to pay more for additional years, then it would seem unfair if my additional 10 years did not get me some additional payment on top of the basic pension.
 
I'm Nobody said:
19% of men, 12% of women die before they reach the age of 65.
I wonder where their contributions go?.
Click to expand...

If they're single then the contributions are absorbed by the system.

If they're married then their surviving spouse is eligible to apply for the survivor's contributory pension, which also makes provision for dependant children.
 
fayf said:
Any thoughts on this, appreciate its only a proposal, right now.
www.rte.ie

Workers could defer pension under 'flexible' plan

The age at which people receive the State pension is set to remain at 66 under plans set to be finalised by the Government in the autumn.
www.rte.ie www.rte.ie

So, main items for people who want to, and are able to work the extra 1, 2, 3, or 4 years, is, what extra payment they will get.

Does this mean PRSI no longer ceases at aged 66 like it currently does. but continues until 70.

People who start drawing their ARF or other pension, at say aged 65, and qualify for the state contributory pension, presumably these will not be excluded, from availing of deferral of state contributory pension allthough they may continue to contribute PRSI from 66 to 70, if PRSI is extended.

So, lets say state contributory pension is a rounded 13k, and one defers the full 4 years, thats 52k in total, that one did not get, so a full 4 year deferal, would need to be at least amount to few extra grand per year, if deferred until 70.

Granted, many other factors, like allowing people who want to work longer, and many social benefits for them.
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This had been raised in the National Pensions Framework that the then government adopted in 2010 (only for a subsequent government to abandon in 2020 for populist reasons!)

Section 3.6 states as follows:

People are living longer, and many people want to have the option of working longer. For those people who wish to postpone drawing down their state pension, arrangements will be put in place to enable them to receive an actuarially increased benefit when they decide to retire. The actuarial adjustment applied will not impose any additional burden on the Exchequer.
In addition, for those with contribution shortfalls at pension age, arrangements will be put in place to allow them to receive additional benefits at a later date if they continue to make paid contributions for pension purposes while remaining in work or self employment.
Click to expand...
 
PRSI increases are enevitable, but to me, this also looks like PRSI, will continue to apply from age 66, up to age 70, so for those who do not want to defer drawing the State Contributory Pension, and commence ARF withdrawals, they maybe subject to PRSI, for the additional 4 years. Thats € 3,200 extra in PRSI deductions, (which is not currently the case)over the 4 years 66 to 70, for someone who has an ARF withdrawal of 20k per annum.
 
The average salary seems to be 45,000 - for regular workers that's 6500+ in PRSI. The pension is 13,000 per year.

The COAP alone is easily affordable now - even a few decades out it will be. It's affordable because in Ireland it's a bad deal for middle to higher income earners and helpfully the payout rate isn't tied to inflation or anything else.

The problems are the other PRSI payments on top of pensions, the general income tax+PRSI hole left if people 65-70 opt to get out of the workforce, but is always framed only as a pension problem as if we've some enviable state pension.
 
Hard to evaluate this until the numbers are published. As it stands I can't see it being of much help to anyone except those who won't have 40 years PRSI at 66. If I make it to 66, I should have over 40 years PRSI by then. If I'm to defer to 67, then I'm forfeiting about €13,000 pension for that year. I'd want an increase of about 10% on the rate of pension from 67 to make that look attractive to me. I wouldn't be at all interested in being told that I'd need to live into my late 80s before I can recoup the €13,000. Somehow I doubt that the increase in pensions offered in return for deferring will be within an ass's roar of 10%.
 
The only people that will want to work up to 70 are by and large in the public services but not on the front lines on high salaries , the state pension would be irrelevant to them anyway.

However if these guys at the top of their careers and pay grades are allowed to stay on until 70 it prevents younger workers moving up the ladder. Then there will be all really old people clinging onto jobs it will be like the over 70s soccer match from Fr Ted, everything will slow down to snails pace
 
Apparantly , according to the report that fayf mentioned , this system is already in operation in Estonia. Anybody know how things are shaping up with it there regarding number of uptakes etc ?
 
Groucho said:
If they're single then the contributions are absorbed by the system.

If they're married then their surviving spouse is eligible to apply for the survivor's contributory pension, which also makes provision for dependant children.
Click to expand...
Information about the survivor's contributory pension here: https://www.citizensinformation.ie/... Pension is,/Widower's (Contributory) Pension.

It's not clear to me whether the deceased person needs to be already in receipt of the pension or whether the survivor's contributory pension would be paid if they died before age 66 (assuming they have enough PRSI contributions).
 
I'm Nobody said:
19% of men, 12% of women die before they reach the age of 65.
I wonder where their contributions go?.


Any idea what's the percentages of woman and men who die before 70? I think that would be relevant to the conversation.
For them that would be €52,000 that they never got after contributing , in a lot of cases a lot more than that figure over a lifetime. Impossible to see how there would be a take up for this scheme.
 
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Steven Barrett said:
One of the main benefits to this is for people who don't have the required level of stamps at age 66. They can carry on working to get the full pension. For those who have accumulated the full amount of stamps, it is hard to see the benefit in deferring the State pension. If the higher amount outpays the standard amount, it will be in your 90's when you probably won't care too much.

The whole thing reeks of political maneuvering. The State pension was set to be paid at age 67 and increase gradually over the years. It was all set in line with life expectancy so each generation got paid the State pension for the same amount of time (on average). This was announced years ago. And then it became an election issue. And now it is a mess. We can't afford to pay pensions from 66 indefinitely so now there is going to be a PRSI increase to cover the costs.


Steven
www.bluewaterfp.ie
Click to expand...
What are the required level of stamps?
 
twofor1 said:
So, say you qualify for the full state pension and choose to work extra years after 66 then you get paid more, fair enough.

I hope that applies to those who worked extra years early in their careers. I started work at 16, when I reach 66 I will have nearly 50 years of contributions, that's almost 10 years more than the required amount for the full state pension.

I understand the person claiming at 70 will be claiming for 4 years less, but if what’s proposed is to pay more for additional years, then it would seem unfair if my additional 10 years did not get me some additional payment on top of the basic pension.
Click to expand...

How would it be unfair? You have answered the question with a person working until 70 claiming less years. You will also have the same opportunity to work until 70 for whatever increase there is.
 
cwc456 said:
It's not clear to me whether
1. the deceased person needs to be already in receipt of the pension, or
2. whether the survivor's contributory pension would be paid if they died before age 66 (assuming they have enough PRSI contributions).
Click to expand...

It's the latter.
 
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