1. Policy Update
1.1 Access to ARF option for holders of Buy-Out Bonds originating in DB Schemes
A change to the Revenue Commissioner’s administrative procedures, effective from 22 June 2016, means that former defined benefit scheme members whose benefits were transferred to a buy-out bond may now access an Approved Retirement Fund (“ARF”) rather than being restricted to the purchase of an annuity.
AC Comment: This change has been welcomed by the pensions industry. The Minister for Finance noted that the change would particularly impact on individuals with buy-out bonds whose defined benefit scheme had been wound up.
1.2 Report of Interdepartmental Group on Fuller Working Lives Published
The Minister for Public Expenditure and Reform, Paschal Donohoe, published the Report of the Interdepartmental Group on Fuller Working Lives, chaired by his Department, on 12 August 2016. The report was prepared by a working group established to consider policy around retirement age in the public and private sectors.
The working group was established as a result of people living longer, more active and healthier lives in addition to the demographic pressures associated with an ageing population. Expenditure on State pensions and relevant supplementary payments is set to rise from €7 billion in 2016 to €8.7 billion in 2026. This is despite the increase in the State pension age from 66 to 67 in 2021 (and the further planned increase to age 68 in 2028).
It noted that in a positive aging environment, workers should be facilitated by employers with the option to work beyond normal retirement age in a flexible, certain manner. The group also recognised that appropriate supports for older workers (such as training) may be needed to enable them to be active participants in the labour market and that the State, employers and workers themselves all had responsibilities in this area.
AC Comment: This report is the most recent attempt to examine the implications arising from retirement ages and make recommendations on appropriate policy frameworks to address these issues.