Pension time again

Last night Alibaba pointed to two examples of the current rhetoric about pensions – one was very useful, the second very revealing. Alibaba noted:

Here’s an observation of what happened here:

‘Consider the Government’s decision to move the pensionable age to 68 by 2028. This decision means that someone retiring after this will effectively lose three years worth of pension entitlements.

“It wiped out €36,000 overnight, yet no-body gave out about it.”‘ So says Gary Owens, the Managing Director of Willis Ireland, an insurance broker, pensions, actuarial and risk management consultancy.

And for proposals to see what’s coming down the line:

http://www.irishtimes.com/business/personal-finance/five-ways-pensions-need-to-change-in-ireland-1.2753183

As ever the second article refused to face up to the fact most people aren’t paid enough to fund pensions.

But what of this ‘move to a pensionable age of 68 by 2028?’.

Here’s more on that:

Retirement at the age of 65 is increasingly impractical, a new Government report argues. It says workers and their employers need to accept that working for longer is both necessary and desirable.

And:

Publishing an interdepartmental report on work and retirement, Minister for Public Expenditure and Reform Paschal Donohoe said the Government would encourage the private sector to allow workers to continue in employment beyond the traditional “normal” retirement age of 65.
His department and public service employers will also review “barriers to extended participation in the public service workforce”. The Minister noted changes to public service employment rules in 2013 mean recently recruited staff can avail of a maximum retirement age of 70.

And:

The interdepartmental group was commissioned to find a way to bridge the financial gap between the time people retire at 65, or earlier, which is still the norm, and the payment of State pensions at the age of 66. In five years’ time, this will be pushed out further, to 67, and to 68 by the year 2028.

I’m sure I’m not the only one who wonders how this will work in practice. One can readily envisage a divergence between those whose pension provision allows them to depart the workforce in their fifties or early sixties and those who are forced by dint of necessity to hang on in there until the bitter end.

And note that for all the talk about ‘normal’ and ‘transitions’ there’s this unpleasant reality:

The notion of a “retirement age” needs to adjust, at least in line with planned increases in the age of eligibility for the State pension, the report states.
At present, anyone retiring, or forced to retire by their employer, may apply for jobseeker’s benefit until they turn 66. The maximum benefit payable, €188 a week, is €45 less than the State pension.

having worked in the private sector most of my life, and on contract in the public sector as well, I’m deeply sceptical about forcing people to stay on and on and on. And if we are to judge from what is actually happening as distinct from what we are told should happen this doesn’t tend to offer confidence:

The problem is that, in the private sector especially, few employers have yet adjusted to the new reality – despite Ibec saying to the report’s authors that feedback from those employers who had kept workers on beyond the age of 65 had been positive.
As a result, workers are being shown the door on their 65th birthday. And, with just 40 per cent of private sector workers having any private occupational pension by the report’s estimation, they are relying on the State pension to pay their bills.

And:

Now they must wait, and most are being forced to register for Jobseeker’s Benefit for the 12 months before their State pension kicks in just to survive financially.
That position will be exacerbated in five years’ time so getting workers and their employers to adjust to a new normal is timely. According to the report, just 3.2 per cent of the Irish workforce was aged 65 or older in 2015 after the new rules had kicked in. That must change.

Think of that. Not just a year but two, three or however many subsisting on Jobseekers Benefit in the context of employment situations where ones previous job is finished and finding new ones difficult – given one’s age. And this talk of ‘adjustment’ seems utopian. As Dominic Coyle notes;

Given the robust and articulate way in which the report presents the case for working later in life, ultimately its recommendations are underwhelming.
Essentially, the proposals look to ensure that employers and workers are more aware of what rights and options are currently available, and that courses are developed to reskill older workers.
There will also be a review of barriers to public servants working up to the new, deferred dates for drawing down the State pension – an issue essentially for those employed after 1995 and before April 1st, 2004.

Of course the financial aspect is key. This is the state attempting to shrug away part of its responsibilities and a private sector that is largely uninterested in pension provision for all but a minority of those who work in it. But it is also indicative of a broader lack of responsibility in relation to pension provision more widely.