The Retirement Pension Measures for those Born Before 1962

The first measure – engenders parity between pensioners born whether before 1962 or after, as it guarantees uniform pension increases from this year onwards. The measure redresses an anomaly which would have impinged on persons retiring as from this year.   It could not have been enacted earlier, as persons born in 1962 and after could only legally become pensionable as from 2023 and their first post-retirement increases would have been due this year.

The second measure – is related to the Maximum Pensionable Income (MPI) of persons born before 1962 and is designed to gradually bringing their MPI in line with that of pensioners born in 1962 and afterwards.

The MPI of pensioners born before 1962 this year will be set at €22,000 and they therefore stand to gain an additional pension increase up to a maximum of €9.47 weekly, depending on an individual’s   pensionable income.

The pensionable income represents the salary average on which a pension is computed.

Pensioners whose pensionable income 2023 stood at €20,424 or over would benefit from an additional pension increase capped at €9.47 weekly.  However, for pensioners whose pensionable income was less than €20,424 in 2023 their pension is already correctly pegged to their full salary earnings and therefore would not be entitled to a further increase.

For a better understanding of the changes, we are putting forward the following three simplified examples:

1. John retired as a storekeeper in 2010 with an annual salary of €12,500. Over the years, his pensionable income augmented in line with increases awarded to his successors in the same grade, and by 2023 it reached €15,000.  His Two-thirds pension now stands at €10,000 annually or €192.30 weekly, and therefore he is drawing his full two-thirds pension entitlement. Thus, the second budget measure is not relevant to him.
2. Michael was employed as a Senior Supervisor until his retirement in 2015 when his annual earnings stood at €18,000. His Pensionable Income by 2023 built up to €20,900 on the basis of salary increments awarded by the company to employees in the same grade.  Although his pensionable income in 2023 exceeded the Maximum Pensionable Income of €20,424 his pension was capped at two thirds of €20,424, that is €261.85 weekly. His Pensionable Income in 2024 is expected to reach around €21,737, and through the enactment of the budget measure he would become entitled to a two-thirds pension of €278.68 weekly instead of a weekly pension of €272.58 which would have been applicable had the MPI mechanism remained unchanged. Hence he would be additionally entitled to the difference of €6.10 weekly.
3. Richard retired as an Assistant Director in 2020 with a salary of €35,000. In view of the MPI mechanism capping of €20,424, his weekly pension in 2023 was capped at two thirds of this or €261.85 per week. Being that the MPI in 2024 would now be €22,000 his weekly pension would increase but it would still be capped to the applicable maximum of €282.05 instead of a weekly pension of €272.58 which would have been applicable had the MPI mechanism remained unchanged.  Therefore, he would still not be granted the full pension entitlement on the basis of his earnings, but he would stand to gain an additional €9.47 per week in 2024 and further increases in the coming years.

The budget measure is also applicable to self-employed persons as long as their declared income when they retired was higher than the MPI applicable at the time of their retirement.