The four largest political parties have now published their General Election 2020 manifestos. The State Pension, retirement ages and ministerial pensions have been central to the debate so far and it isn’t surprising that each of the four main political parties have addressed electorate concerns around the level of the State Pension and increasing the age at which it becomes payable. In this article we delve into the manifestos for each of the four largest political parties and set out how they propose dealing with these issues if elected to government.
The Fine Gael General Election Manifesto 2020 (the FG Manifesto)
The FG Manifesto contains the following commitments for the State Pension and pensions in general:
- It provides a guarantee to pensioners that, over the next 5 years, it will raise the annual pension by at least €25 a week, or €1,300 a year
- It promises the introduction of the total contributions approach in comparison to the current yearly average system for the contributory State Pension. It says that the level of pension received by an individual using this method will be directly proportionate to the number of social insurance contributions made over his or her working life
- It promises to cater for those workers that opt out of paid employment for periods to carry out carer duties. This, the FG Manifesto says, will be achieved by allowing credit for time spent as a carer for children or elderly loved ones
- It confirms that the planned increase in State Pension ages will continue to apply, moving to 67 in 2021 and to 68 in 2028. It says that Fine Gael will engage with employers and unions under the Labour Employer Economic Forum (LEEF) to allow a reassessment of the pace at which the State Pension age is being raised taking full account of actuarial projections about the Social Insurance Fund
- It says that a new State Transition Pension will be introduced for those retiring at 66 which will be paid at the higher State Contributory Pension rate. It promises that this will not be means tested, though the recipient will have to be retired
- It promises that Fine Gael will provide for those retiring at 65 with the introduction of the new State Pathway Pension. It states that this will maintain the current level of social welfare allowance but without the requirement to meet jobseeker criteria of actively seeking work and signing on
- It confirms the previous Government’s commitment to automatic enrolment (AE). It confirms that AE will include matching contributions by both workers and employers and says that the State will top-up these contributions. It confirms that the expected roll-out of AE will take place over a decade
- Finally, it says that Fine Gael will engage with employers to allow people to stay in work for longer
The Fianna Fáil General Election Manifesto 2020 (the FF Manifesto)
The FF Manifesto contains the following pensions related commitments:
- It promises to reinstate the State pension (transition) as an interim measure, which will be paid to those who are not yet entitled to the State Pension and are aged 65 and over
- It promises to establish a commission on pensions
- Fianna Fáil promise to defer the age increase set for 2021 and to progress a bill which will outlaw contracts that stipulate a retirement age of 65
- It promises to legislate to ensure no solvent company can wind up their pension without the permission of the Pensions Authority
- It promises to increase the State Pension by €25 per week
The Labour Manifesto General Election Manifesto 2020 (the Labour Manifesto)
The Labour Manifesto contains the following commitments on pensions:
- It promises to maintain the State Pension age at 66
- It promises to incentivise employers to end compulsory retirement at 65. It promises that, for the duration of the next government, employers will not have to pay employers’ PRSI for workers aged 65 and over
- It says that Labour will link social protection payments to the cost of living which will include pensions. This will be based on a new national cost of living index, linked to the real cost of living on a modest but sufficient income
The Sinn Féin General Election Manifesto 2020 (the SF Manifesto)
The SF Manifesto contains the following commitment for retirement and pensions:
- It prioritises the increase in the State Pension rate by €20 per week over the term of the next government
- It promises to stop the planned pension age increase to 67 in 2021 and reintroduce the State Pension for 65 year olds who choose to retire. The SF Manifesto also promises to prohibit mandatory retirement, ensuring that those who want to continue working can do so
- It says that Sinn Féin would like to see the roll out of a universal pension for every person based on age and residence
- In relation to tax changes the SF Manifesto promises to reduce the pensions earnings limit and reduce the Standard Fund Threshold to €1.2 million
Commentary on the General Election 2020 and State Pension Promises
The Society of Actuaries in Ireland (the Society) has commented that proposals to bring back the transition pension at 65 will require a significant increase in PRSI, if the intention is to continue paying it at this age into the future. The Society confirmed that this analysis is based on the most recent audit of the Social Insurance Fund.
The Society suggests that the pensions row between the main parties might even threaten the future of the State Pension. It suggests that one solution might be to allow people retiring at 65 to draw a reduced level of State Pension early, as an alternative way of dealing with the increasing State Pension retirement ages of 67 (2021) and 68 (2028).
The issues surrounding the level of State Pension and the age at which it becomes payable have been bones of contention in recent weeks and they are expected to remain central issues in the lead up to election day. The fact that pensions and retirement benefits have taken centre stage at election time is to be welcomed but, as the Society of Actuaries has correctly cautioned, politicians must be careful when considering pension related changes which could have enormous financial implications for generations to come.