All parties in government talks agree ban on extending pension age to 67

ALL three parties engaged in coalition talks are set to agree a ban on extending the old age pension qualification age to 67 at the end of this year.

Sources in Fine Gael, Fianna Fáil and the Green Party have strongly indicated they will not be accepting a warning from the Fiscal Advisory Council chairman Sebastian Barnes that the planned change in the pension age from 66 to 67 must go ahead on December 31.

Mr Barnes, who chairs the expert group set up after the 2008 economic crash to give independent economic advice to government, made his pension-age warning along with other directions that there must be spending cuts and tax hikes to deal with the coronavirus fallout.

The economist told the ‘Sunday Independent’ that keeping the pension age at 66 was “very risky”.

The pension changes became a huge issue last January as the General Election campaign kicked off.

Moves to increase the pension age were first agreed by the 2007-2011 Fianna FáilGreen Party coalition and later legislated for by the Fine Gael-Labour 2011-2016 coalition. But other pension anomalies, such as some workers being obliged to retire at 65, with uncertain welfare entitlements until they finally qualified for the pension, triggered widespread support for a campaign by Siptu.

In the election campaign, Sinn Féin backed the idea of full pension entitlements at 65. This was followed by support from the Green Party and Fianna Fáil to pause the change to 67 and review the issue more generally.

Fine Gael stuck to its assertion that the pension age must be extended to 67, but it pledged proper welfare payments for those retiring at 65.

The matter will be among the many issues at coalition talks which begin in earnest today at the Department of Agriculture offices in Dublin, which is situated next door to Leinster House.

The negotiating teams for all three parties are bound by strict pledges not to divulge any part of their discussions in progress.

But sources in all three parties stressed that the pension-age issue is not going to be a threat to a deal emerging.

“Whatever problems may threaten an agreement happening, the pensions issue is not one of them,” one source familiar with the talks process told the Irish Independent.

Another said that, with both the Green Party and Fianna Fáil determined the age extension will not happen this December, Fine Gael will not oppose that. “Both the traditional parties rely increasingly on the ‘grey vote’ and are not going to antagonise those about to qualify for a pension,” another source said.

But the Fiscal Advisory Council’s warnings about the need for tax hikes and spending cuts from later this year will not be so easily set aside.

Observers note that whoever takes over the next government in Ireland will face the biggest economic challenge in the State’s history.

Already unemployment is twice the worst rate during the recent economic crash. The Finance Department projects that even by the end of this year unemployment is likely to be still above 10pc, and will continue to be a problem in 2021, cutting tax revenues and increasing welfare bills.

Mr Barnes warned that not increasing the pension age from December 31 next would cost €600m extra per year. It would cost more in later years.

Sources in all three parties saythe issue will not be a threat to the talks