A tiered pension system will come into effect in January 2024, Minister for Social Protection Heather Humphreys has confirmed.
It will see 66-year-olds given €253 per week, 67-year-olds given €266, 68-year-olds given €281, 69-year-olds given €297, and those aged 70 and over given €315.
The issue of whether to increase the pension age has come up frequently since dominating the February 2020 election.
The Pensions Commission proposed to increase the state pension age by three months every year from 2028 and then to 68 by 2039.
A report published by the Social Protection Committee recommended maintaining the qualifying age for the state pension at 66 and introducing legislation to ban mandatory retirement clauses in employee contracts.
Announcing the Government’s policy plan, Ms Humphreys said the tiered option will give people “flexibility”.
“We need to move away from the outdated ‘one age fits all’ approach to pensions,” she said.
Ms Humphreys said keeping the pension age at 66 will result in pay-related social insurance (PRSI) increases.
An actuarial review of the Social Insurance Fund will be completed later this year “to give us the most up-to-date projections” on the fund’s status, the minister said.
Based on this, the Government will bring forward “a roadmap for PRSI increases over the next 10 years” by spring 2023.
“While I think it’s important to be honest with people that PRSI rate increases will be needed to be able to pay for our pension system in the future, I’m also very conscious of the challenges that people are facing at the moment,” Ms Humphreys said.
“I want to assure people that PRSI increases will be modest and carried out on a gradual, incremental basis.”
The Minister said independent actuarial reviews of the Social Insurance Fund will be carried out every five years, with the Government able to adjust PRSI rates based on the most up-to-date information.
The Irish Fiscal Advisory Council said the pensions issue is one of the main challenges facing Ireland’s public finances.
As it stands, life expectancy in Ireland is increasing by around a year every six years, leading to what is expected to be a 50% increase in the number of people reaching the age of 65.