Accountants have warned that changing the state pension age without parallel reform to private pensions would risk workers living their retirement in poverty.

A survey by Chartered Accountants Ireland shows that 93% of its members support the introduction of auto-enrolment in employer pension schemes for workers, while 60% say the state pension age should not increase beyond the present 66 years.

Public policy lead Cróna Clohisey (pictured)said: “For many, this already means a working life well in excess of 40 years, during which considerable tax and PRSI contributions will have been made.  Workers deserve clarity on what age they will become entitled to the state pension so that they can plan for their retirement and we are calling for 10 years notice to be given to any increases in the state pension age.”

CAI also point out, in their submission to government on the issue, that increasing the pension age without addressing the issue of contractual retirement ages would risk putting further pressure on the state’s finances as many workers would have to bridge the gap to the state pension by availing of the Benefit Payment for 65-year-olds. 

On mandatory retirement, 70% of its members say mandatory retirement ages should be abolished, to afford workers the choice to work as long as — or retire as soon as — they choose to.

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The submission advises that if pension age changes are introduced, they should not be for more than one year at a time and at least ten years notice should be given. That would mean warning today’s 56-year-olds, due to start drawing the state pension in a decade from now, that it would not come on stream until they reach the age of 67 in 11 rather than ten years — and doing so now.

They cite examples elsewhere in Europe such as Belgium, Croatia and Malta. In Belgium the retirement age is 65 for those retiring on or before 31 January 2025, increasing to 66 years for those retiring between 1 February 2025 and 31 January 2030 and 67 years for those retiring on or after 1 February 2030.

In Malta the current retirement age is 63 years, gradually rising to 65 years in 2027. Croatia’s retirement age for men is 65 (women 62) which will rise gradually to 65 in 2030 and 67 by 2038, which is 17 years off.

The CAI estimates that the state pension will take up as much as 80% of Social Insurance Fund spend by 2071 and that the increasing cost should be financed by increased taxation and social insurance contributions, the latter being significantly lower than those charged in other countries and open to phased increases of 0.25% over, say, a decade. 

The survey and submission are responses to the Pensions Commission’s public consultation on the sustainability of the state pension, and the full details are available here.