The high cost of childcare, which is forcing women out of paid employment, is contributing to lower pension incomes among women, according to the ERSI.
Dr Claire Keane, an economist with the ERSI, said that a lack of flexible working options, long-term care services and affordable childcare are resulting in women receiving smaller pensions than men, as they are forced to take time out of employment in order to raise children or care for loved ones.
The average pension income of retired women is 35 per cent lower than that of retired men, according to Dr Keane.
She told the Oireachtas Committee on Social Protection that by solving these issues, this would allow women to build up more PRSI contributions so their pensions match that of men.
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Dr Nat O’Connor from Age Action agreed that the current pension system is failing women. “It fails to provide an adequate income for many people, especially women - such as those who worked rearing children or as carers, as well as those who are counted as “dependents” of their spouse, not as pension recipients in their own right.”
The committee were discussing the Pensions Commission’s recommendations.
Under these recommendations, the state pension age would increase by three months every year starting from 2028, to reach 67 in 2031. Further increases of three months every second year will occur after this, so by 2039, the state pension age would be 68.
Self-employed
The commission also recommended an increase in PRSI rates, most notably among the self-employed.
The ERSI also said that despite the pension age rising to 66 in 2014, there was no real increase in people retiring at this age, according to their research.
Barra Roantree, an ERSI economist, said that because supplementary payments were put in place, people continued to retire at 65.
Previously, retired people could apply for jobseeker’s benefit and then a new benefit payment for 65 year olds was introduced.
Mr Roantree said he was not advocating for the payment to be taken away, but that the government needed to consider these supplementary payments when changing the pension age, as the de-facto retirement age is still 65.
Dr Keane said another reason why people still retire at 65 was because this is stipulated in their employment contracts. “The recommendation by the Commission to align retirement ages in employment contracts with the State Pension age is therefore an important one.”
Dr Keane also believed that if people could work past state pension age, those who emigrated or faced periods of unemployment can continue to pay social insurance contributions, plugging any gaps in their contribution history.
Dr Nat O’Connor from Age Action said these people should be allowed to continue working if they were able to, and many older people faced barriers to employment due to ageism.
Many needed to continue working in order to meet the higher cost of living, according to Dr O’Connor, and costs associated with fuel, maintaining a car, renting, retrofitting older homes and keeping private health insurance were worries faced by people contacting Age Action.
Dr O’Connor said the government should look into reducing these costs, especially considering that inflation has reduced the spending power of the state pension by over €10 since January 2019, and the €5 increase next year will only make up for half of that loss.