03 Oct 2022

Hike in State Pension and PRSI payments - New 'controversial' proposals from Pension Commission

Hike in State Pension and PRSI payments - New 'controversial' proposals from Pension Commission

Hike in State Pension and PRSI payments - New 'controversial' proposals from Pension Commission

The Government has published a report which proposes to increase the State pension age by three months every year from 2028.

This proposal is part of the report of the Pensions Commission that Minister for Social Protection Heather Humphreys has brought to Government.

Under the recommendations, the pension age would reach 67 in 2031 and it would increase again by three months every two years from 2033 onwards.

Under this plan the pension age would be set at 68 years from 2039.

Ms. Humphreys said:

“The state pension is valued by all of society and it is the bedrock of the pension system in Ireland. It is extremely effective at preventing pensioners from falling into poverty and we want to make sure that this stays the case into the future.

“There are clear challenges in ensuring the sustainability of the state pension for future generations. This has been known for years and confirmed in the Report of the Commission on Pensions.”

It will now be sent to the Joint Oireachtas Committee on Social Protection to seek its views on the recommendations with a decision on whether or not to proceed is expected to be reached before next April.

Meanwhile another proposal from the Pension Commission wants to remove a special exemption that allows people over 66 to avoid Pay Related Social Insurance (PRSI) on their non-state income.

More than 350,000 pensioners could be hit with PRSI for the first time under the controversial new proposals.

Future governments face a challenge to maintain funding for the state pension and the commission believes older people should contribute as an act of solidarity.

The charge would be set at a rate of 4pc on all weekly income over €100, except for social welfare payments such as the state pension. It would apply to private or public sector pensions, and income from a salary for a person over 66 who is still working.

Anyone getting income from savings, dividends, investment returns, or rental income who is 66 or older would also have to pay PRSI for the first time.

The Pensions Commission recommends significant changes, including linking rises to inflation and offering greater flexibility around when people can start accessing payments.

One idea is to allow those who started working early in their lives to have the option of retiring at age 65, which is one year earlier than the current state pension age of 66.

And those who want to keep working should be able continue to build up pension credits up to age 70, it recommends.

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