Once upon a time, everyone retired at 65 – those who were lucky enough to have a job anyway. Now, not so much. The proportion of older workers, particularly those who want to work beyond what was the traditional retirement age of 65 is forecast to grow significantly in the future.
As a society, we are getting older and living longer. It is estimated that by 2055 there will be 2.3 million people of working age in Ireland but about 4.9 million pensioners. It is a big challenge to meet their pension expectations. In Ireland, many people do not have personal or work pensions and so are dependent on the State Pension to sustain any standard of living in retirement. All of this explains why the State Pension age is increasing to 67 in 2021 and 68 in 2028.
Bridging the gap until you reach the point at which you receive the State Pension is now a crucial question for a lot of older workers. Have no fear, the Government has produced the thrillingly entitled document, A Roadmap for Pensions Reform 2018-2023, which provides a concise overview of where we are at. It was the focus of a recent meeting of CIPD (the Chartered Institute of Personnel and Development) which further explored the subject.
A quick sidebar here and probably of less interest to older workers is the idea of auto enrolment in a pension scheme in which both the employer and the employee make contributions. These schemes are mandatory elsewhere including the UK and Australia. They are considered a good idea but are complicated and we in Ireland are only at the beginning of a long consultation period with the various stakeholders.
Up until relatively recently, a retirement age of 65 was considered usual and included in most contracts of employment. And for the most part, employees were happy to retire. However, attitudes have changed. Terminating someone’s employment just because they have reached 65 can now be viewed as discrimination under the Employment Equality Act. Employers must now offer what is called ‘objective justification’ as to why someone has to retire at 65.
Some of the reasons that might employers might offer are : intergenerational fairness (how do you allow younger workers to climb the promotional ladder if there are too many older workers in situ?); health and safety (the reason Gardaí and fire fighters can retire earlier – in fairness, who wants a 65 year fire fighter at the bottom of the ladder?); creation of a balanced age structure in the workplace (not so much of a problem for the tech companies with their predominately under 30’s workforce!); personal and professional dignity (employers find themselves in something of a bind here, fearing that if they speak about age and ageing it can be construed as discriminatory); succession planning (employers are looking for certainty and if everyone is due to retire at 65 it makes it easier to sort out issues around succession).
In 2017, the Workplace Relations Commission published a Code of Practice on Longer Working. It is, despite the title, very interesting and sets out some best principles and practices to follow during discussions between employers and employees in the run up to retirement. The Code is concerned with: how to use the valuable skills and experience of older workers; on what grounds could an employer object to someone wishing to work longer; what new retirement arrangements will be needed; how to deal with requests from employees who wish to work longer.
Employers naturally need to plan so having a discussion with individuals about their retirement intentions is vital. The Code is very clear that information and suitable guidance can help employees to make more informed choices in planning for their retirement. Employers should consider the provision of certain supports, for example, suitable pre-retirement courses, a flexible or part time working arrangement, counselling etc., essentially with a view to assisting the transition to retirement.
Of course, there is an onus on the employee to ask themselves if they can continue to work to the required standard? Maybe it would be possible to look at other more flexible working patterns, for example, more part time work or a different role? Employees need to think about how long they want to work – until they receive the State Pension or beyond? Will working longer affect their pensions or their contract of employment?
These are very individual decisions and employees need to be as informed as possible. The Retirement Planning Council of Ireland (RPCI) offers a variety of courses that explore these options. They recommend people attend their pre-retirement course about two years out from when they propose to leave. It may be that post the course, individuals decide to stay on at work. They may decide to work longer but in a different capacity either at the same firm or elsewhere. Alternatively, starting their own business is an increasingly popular choice for older people. RPCI offers courses to explore all these options: –
- Planning for Retirement
- Working On in Retirement
- Start Your Own Business
If you are nearing retirement age and are not sure what to do, a conversation with your employer about taking one of these courses might be very worthwhile.
A Roadmap for Pensions Reform 2018 – 2023 http://www.welfare.ie/en/pressoffice/pdf/PensionsRoadmap.pdf
Industrial Relations Act 1990 (Code of Practice on Longer Working) (Declaration) Order 2017 / S.I. No. 600 of 2017 http://www.irishstatutebook.ie/eli/2017/si/600/made/en/pdf
Established in 1974, the RPCI is a Registered Charity, a not for profit organisation, wholly independent of all financial institutions and with a voluntary board of directors. RPCI is based at 14/15 Lower Camden Street, Dublin 2 Ph: 01 478 9471 / www.rpc.ie Courses are held in Dublin and around the country on a very regular basis. Please check the website for more details.