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Ireland’s new government freezes state pension rise

07/07/2020 Posted by IAPF | Comments(0)

Ireland’s new coalition government has agreed to postpone the planned increase in state pension age from 66 to 67 years – to have taken effect next January – pending a decision by a new Commission on Pensions.

After last February’s general election gave an inconclusive result, a new government was finally formed when the Green Party agreed to join a coalition government with the country’s Fine Gael (FG) and Fianna Fáil (FF) parties.

The new Taoiseach (prime minister) is Micheál Martin (FF leader) until December 2022, when the post will be resumed by Leo Varadkar, the FG leader and outgoing prime minister, for the second half of the five-year parliamentary term.

The minister for social protection is now Heather Humphreys, replacing Regina Doherty, who lost her parliamentary seat in February but stayed on in a caretaker role.

The government proposals also include:

  • Setting up a Commission on Pensions to examine sustainability issues with state pensions and the social insurance fund. The Commission will report by June 2021, government action being taken within six months.
  • Paying an early retirement allowance or pension to 65-year-olds who retire early, at the same rate as jobseekers’ benefit, without the requirement to sign on.
  • Enabling people to defer receipt of their state contributory pension on an annual basis.
  • Examining options for a pension solution for carers.

The government has also backed its predecessor’s commitment to introducing auto-enrolment: there had been fears this might be sidelined because of the economic impact of COVID-19.

The framework includes:

  • Matching contributions from both workers and employers, with a state top-up;
  • Phased roll-out of workers’ contributions over a decade;
  • The ability for workers to opt out;
  • A range of retirement savings products available for workers;
  • A charges cap on pension providers.

Jerry Moriarty, chief executive officer of the Irish Association of Pension Funds, told IPE: “We welcome the continuing commitment to auto-enrolment. There is a strong need to have more people saving more for retirement, and auto-enrolment is a proven way of achieving this. As a country, we need to get on with the planning and implementation of this.”

He added: “We also welcome the establishment of a Commission to look at issues relating to the state pension. This was a big issue during the election, and while demographics point to the need for people to work longer, we also need solutions for those for whom that isn’t possible.”

Read the original article here

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