Internet Explorer 11 (IE11) is not supported. For the best experience please open using Chrome, Firefox, Safari or MS Edge

The Programme for Government published in June by Fianna Fáil, Fine Gael and the Green Party confirmed that the increase to the age at which the State pension becomes payable, to age 67, will not occur as planned in 2021. It is anticipated that a report from a newly established Commission on Pensions will examine the issue in more detail and consider the sustainability of retaining age 66 as the State Pension age for now.

Exactly one month after the publication of the Programme for Government, the Irish Fiscal Advisory Council (IFAC) published its inaugural Long-Term Sustainability Report where it presents a model to achieve sustainability in the State Pension. The model envisages that the age at which the State Pension becomes payable would continue to increase to age 69 by the years 2035 -2040. We look here at the IFAC report at a time when any proposed increase in the State Pension age continues to be politically unpopular whilst also being an economic necessity.

The report of the Irish Fiscal Advisory Council

A rapidly aging population

The Long-Term Sustainability Report (the Report) addresses the approaching pensions crisis in some detail. It states that though the proportion of older people in Ireland is relatively low today by EU standards, the population will age rapidly over the coming decades so that the dependency ratio, meaning the population aged 65+ as a share of the population aged 15–64, will reach the present EU average by the 2030s and will accelerate from there on.

The debt burden

The Report notes that age-related costs, primarily for pensions and healthcare, will add to the national debt burden and assumes that half of the debt burden by 2050 will be linked to unfunded aging costs. It argues that pre-emptive actions that will strengthen the public finances now would mean less adjustment in the future.

The Report suggests that by allowing the State Pension age to increase in line with life expectancy the State would safeguard the future stability of public finances. It goes on to say that retaining the current State Pension age implies higher spending and gross debt in future decades. The Report expects that if the current age is retained then larger deficits would begin to emerge from as soon as 2025. The COVID-19 pandemic has contributed greatly to this and IFAC expects that it will continue to have a major impact on the economy and the public finances for the next 5 years.

The Programme for Government

A political choice

In our initial look during April of this year at the State Pension age in a post-pandemic Ireland, we argued that any electoral promise made to reintroduce 65 as the State Pension age should be viewed with skepticism. However, a continued retention of 66 beyond 2021 could be viewed as wholly cynical and an unfortunate example of political short-termism.

The current position

Under the Social Welfare and Pensions Act 2011 the State Pension age is set to increase to 67 in 2021 and 68 in 2028. These increases were hotly debated in this year’s general election with some candidates suggesting that the relevant age should return to 65.

The Programme for Government confirms that the increase to 66 in 2021 will be deferred with the Commission for Pensions due to report by June 2021. The Programme goes on to say that “The Government will take action having regard to the recommendations of the Commission within 6 months”. It is unlikely that the Commission for Pensions will ignore the IFAC Report and the range of sustainability issues included in the Report will need to be addressed.


The COVID-19 pandemic has essentially thrown the fiscal playbook out of the window and the State is borrowing massive amounts of money at very low interest rates to pay for the massive financial stimulus packages that have been introduced to mitigate the effects of the virus. We cannot allow the current financial chaos to fudge over the tough decisions that must be made in relation to the State Pension age. Failure to do so will only compound the financial swamp that future generations will have to wade through.

There is no question that the State Pension age will have to increase incrementally in the coming years and it appears that the sooner that this is accepted by those in Government the better it will be for future generations. It is also likely to assist in mitigating a potential choice that will be faced by a future government of cutting the State Pension or increasing PRSI significantly. It remains to be seen if the political courage exists to accept short-term pain for long-term sustainable gains.

In the short term, pension scheme trustees will need to examine their scheme documentation in order to establish what action they need to take as a result of any potential changes to the State Pension age.

For more information, 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.

Share this: