Pensions Update: Thinking of Retiring at 65? Think Again…

20 September 2016

The Interdepartmental Group on Fuller Worker Lives has published their Report on policies around retirement age in both the public and private sectors. It makes for difficult reading for those of us who dream of setting sail for the Bahamas in a yacht (purchased with our retirement lump sum!) once we hit 65. It appears that a lot of us may now be spending the twilight of our lives helping to build those yachts as opposed to sailing in them! 

The establishment of the Interdepartmental Group on Fuller Working Lives (the “Group”) was a response to the fundamental fact that people are now living longer, and the demographic pressures associated with an ageing population. 

In its Report, the Group identified a set of framework principles and recommendations to guide policy makers in this area. Overall, the Report makes for difficult reading for those of us who dream of setting sail for the Bahamas in a yacht when we hit 65. 

Currently, State expenditure on pensions and relevant supplementary payments amounts to €7 billion. This amount is anticipated to rise to €8.7 billion in 2026, notwithstanding the rise in age of eligibility for the State Pension increasing to 67 in 2021. The age of eligibility will rise further to 68 in 2028.

The Report discusses current practice in relation to retirement age, highlighting that there is no statutory retirement age for private sector employees. It is possible for an employer to specify a compulsory retirement age, where they have reasonable and proportionate grounds for doing so. The subject of mandatory retirement age is explained in more detail in a recent article published by our Employment team. 

Policy Framework Principles

The Group developed a set of broad principles in order to encourage individuals to remain in employment beyond what is currently considered to be the normal retirement age. These principles include:

  • an acceptance in society that longer working is not only possible, but also necessary so as to adjust with the increase in age for eligibility for the State Pension;
  • facilitating workers, insofar as possible, with the option to work beyond normal retirement age, having regard to certainty and flexibility in relation to workforce planning;
  • providing older workers with appropriate support and training. Additional fixed term employment contracts should be fair, with the terms and conditions of the previous contract of employment taken into consideration; and
  • social welfare will continue to provide a safety net for those who are not in a position to work longer.


  • The Department of Jobs, Enterprise and Innovation will request that the Workplace Relations Commission develop a Code of Practice in relation to longer working.
  • Employers should ensure that they have a clear policy on retirement in place, which has been communicated to employees. Awareness should be raised by employers and worker representatives of the practicalities working for longer. These issues should include tax treatment and retirement income, incentives to remain in work, training and employment opportunities, etc.
  • The Department of Public Expenditure and Reform will review issues which may render longer working lives unappealing, such as the current and planned age of entitlement to the Contributory State Pension.
  • The Department of Justice & Equality will ask the Irish Human Rights and Equality Commission to ensure that appropriate guidance material is made available for employers on the use of fixed term contracts beyond normal retirement age.
  • The Department of Education and Skills will request SOLAS and the Education and Training Boards, in the context of the National Skills Strategy, to support older workers remaining in the workforce by providing them with training opportunities.


The ability to maintain longer working lives is to be commended where the employee concerned is willing and able to continue to work. It should be remembered that by working longer we are reducing dependence upon the State Pension and increasing the tax intake. It is in the State’s interest that we all work for as long as we can.

But we must not lose sight of what is in the individual’s best interest. Surely a happy and fulfilling period of retirement is equally as important as a productive and enjoyable working life? We must be careful to get the balance right and the Report suggests a shifting of the scales is ahead for us all.

For more information, please contact a member of our Pensions team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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