Increase in Compulsory Retirement Age to 70 for Certain Public Service Workers

04-02-2019

Authors: Séamus Given and Sarah Lawn

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The Public Service Superannuation (Age of Retirement) Act 2018 was enacted on 26 December 2018.  The 2018 Act provides for an increase to age 70 in the compulsory retirement age for the majority of public servants recruited before 1 April 2004.

As a result, an increased number of public servants will be entitled to work longer if they wish, the effects of the “pension income gap” will be significantly alleviated and Government policy in relation to supporting fuller working lives and pension reform will be advanced.

The change does not however fully consolidate the retirement ages of the difference cohorts within the public service.

Position Prior to 26 December 2018

The compulsory retirement age in the public service is generally determined by the date of recruitment of an individual:

  • If an individual was recruited prior to 1 April 2004, their compulsory retirement age was 65.
  • If an individual was recruited between 1 April 2004 and 31 December 2012, they do not have any compulsory retirement age (this group is referred to as
    “new entrants”).
  • If an individual was recruited on or after 1 January 2013, their compulsory retirement age is and remains 70.

It is worth noting that certain employees in the public service, due to the nature of their work, are required to retire early, including members of An Garda Síochána, the Permanent Defence Force, firefighters and prison officers. This group and new entrants are not affected by the changes made by the 2018 Act.

Need for Change

The Interdepartmental Group on Fuller Working Lives recommended in August 2016 that the Department of Public Expenditure and Reform (“DEPR”), with public service employers, review the existing statutory and operational considerations giving rise to barriers to extended participation in the public service workforce. In this context, the 2017 DEPR Review of Barriers to Extended Participation in Public Service Workforce clearly identified a need for a change to the compulsory retirement age of certain groups of public servants.

The key drivers for such change were identified by DEPR in a June 2018 Regulatory Impact Analysis as follows:

1. Pension income gap
The State Pension (Contributory) (“SCP”) is not payable until age 66. As a result, public service employees obliged to retire at 65 must apply for Jobseeker’s Benefit from the Department of Social Protection to address this pension income gap. This gap is set to increase as the age of eligibility for SCP increase in 2021 (to age 67) and in 2028 (to age 68).

2. Financial commitments
In today’s changing society, people tend to have financial responsibilities later in life. Examples given were that people are taking on mortgages later in life, supporting multiple children through third level education and having second families. This has resulted in an increase in the number of people wanting to work beyond the age of 65.

3. Equality issues
Under the Employment Equality Acts 1998-2015, an employer can impose a compulsory retirement age if it can be objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary. It was considered that rationalising the various compulsory retirement ages in the public service would assist the State in justifying the existence of a compulsory retirement age in the public service.

Alternative options

In considering the options available to address the issues identified, DEPR examined the option of allowing employees to work longer on fixed term contracts. A number of concerns were outlined in relation to this approach including:

  1. Pension accrual for those public servants who wish to remain on fixed term contracts would not be possible without legislative change.
  2. It would be difficult to ensure consistency of treatment of staff, given the numbers of staff and the diverse range of bodies impacted.
  3. In time, with the increase of the State Pension age, the use of fixed term contracts would become more impractical, with fixed term contracts being required for a longer period of time.

In considering whether to impose a compulsory retirement age of 70 on new entrants recruited between 1 April 2004 and 31 December 2012, DEPR was advised that to do so would interfere with this group’s legal entitlements. Further, exclusion of this group from an otherwise standardised compulsory retirement regime was not seen as an issue in terms of justifying a compulsory retirement age of 70 for the public service.

Impact of the 2018 Act

With effect from 26 December 2018, public servants recruited prior to 1 April 2004 will be subject to an increased compulsory retirement age of 70, even where their existing employment contract provides for a compulsory retirement age of 65. Any such additional service will continue to accrue retirement benefits, subject to the maximum pensionable service which is normally 40 years.

The change will impact the majority of those working for public service bodies including local authorities, education and training boards, bodies established under statue and many semi-state agencies.

It is worth noting that the 2018 Act excludes public servants who retired from a public service body upon or after reaching the age of 65 prior to 26 December 2018, but who were still employed by a public service body on that date. On this basis, it would appear that if a public servant retired prior 26 December 2018, and was subsequently engaged on a fixed term contract by a public service body, they will not be entitled to work to the age of 70 and instead will be bound by the terms of their fixed term contract.

The 2018 Act also provides the Minister for Public Expenditure and Reform with the power to increase the retirement age further, taking into consideration particular factors.

Organisations impacted by the changes introduced by the 2018 Act are advised to familiarise themselves with the changes and communicate these to impacted employees.

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