Bigger pension if you wait until 67 to retire? New plan may reward those working later in life

The new proposals would financially reward people who retire later in life and pay them a higher weekly pension rate, while keeping the State ­pension age at 66.

Social Protection Minister Heather Humphreys met Green Party leader Eamon Ryan this week to discuss the issue.

She has also previously met Tánaiste Leo Varadkar and Public Expenditure and Reform Minister for Michael McGrath to discuss the issue.

Senior Government officials across a number departments also met yesterday. However, sources said discussions were still in their early stages, with “a lot of work” yet to be done.

Under the proposals, the “benchmark” State pension would remain at 66, but people who work until they are 67 and older would be in line for a bigger pension.

It is not clear at this stage how much higher per week this amount would be.

It is understood the higher amount for those retiring at 67 or above would be “actuarially adjusted” to take account of the extra years worked.

However, government figures are afraid of the political backlash over such proposals, which are viewed as contentious by many within the Coalition.

Senior figures are worried they may be accused of raising the State pension age to 67 by the backdoor.

The State pension age was set to rise to 67 in January of last year before the Government halted the change.

And Taoiseach Micheál Martin last week vowed the State pension age would not rise beyond 66, even if it meany small PRSI increases.

The new proposals will be viewed as a compromise between Fianna Fáil and Fine Gael. Many Fianna Fáil TDs view the State pension age – and keeping it at 66 – as a hardline issue that will dictate the survival of the party.

Sources said there was merit to the proposals, despite emphasising that discussions were still in their early stages.

The move comes amid calls from Fine Gael for “flexibility” on the pension age, with some seeking a move away from a set retirement age.

The proposals are not part of the Pensions Commission recommendations, which said the State pension age should rise to 67, but not for another number of years.

Many in Fine Gael blame the party’s stance on pensions for losing 12 seats. In the party’s 2020 manifesto, it pushed for transitionary payments – to bridge the gap between retirement age and the pension age – for those retiring at 65 and 66.

While government sources backed up Ms Humphreys’ comments on the need for “flexibility” as being the party’s stance on pensions now, some TDs and senators who spoke to the Irish Independent were unable to say what the party position was.

Long-term family carers of more than 20 years are also in line for the State contributory pension. The State would retrospectively make contributions for long-term carers who haven’t been able to meet the minimum of 520 paid contributions.

This was a recommendation in the Pensions Commission report.

It is understood Fianna Fáil is particularly keen on this measure.

A government decision on the Pensions Commission’s report has been long awaited and was initially expected last April.

A senior source said that in compiling work on the findings of the report, the Department of Social Protection had taken into consideration the preliminary analysis of Census 2022.

It is now likely that a formal decision will be made by the Government in the autumn, after the summer recess.

Ms Humphreys said this week it would be a number of months before an announcement would be made.