13 May 2025
In response to the Department of Social Protection’s Pensions Commission Recommendations and Implementation Plan of 2021, the Government committed to a range of pension reforms, including those relating to contractual retirement ages. One of the proposed reforms aims to provide an employee with the ability to continue in employment until they reach the state pension age.
The recently published Employment (Contractual Retirement Ages) Bill 2025 (the ‘Bill’) creates a link between a contractual retirement age and the stage pension age. The current pensionable age is defined in the Social Welfare Consolidation Act 2005, as being age 66. It is proposed that where the mandatory retirement age included in a contract of employment is below 66, that age may be substituted with either the pensionable age (66), or an age the employee consents to retire at, which is later than the contractual retirement age, but before the pensionable age.
The employee must provide notification to their employer in writing that they do not consent to the mandatory retirement age as set out in their contract. This notification must be made:
If this notification is not provided, the employer may assume that the employee consents to retire at the contractual retirement age. This approach reflects the objective of allowing, but not compelling, an employee to stay in employment until the pensionable age.
The employee may withdraw their notification that they refuse to consent to the mandatory retirement age set out in their contract of employment, on the giving of the notice period stipulated in their contract of employment or as set out in the Minimum Notice and Terms of Employment Act 1973.
Where an employee has notified their employer in accordance with the proposed statutory requirements, the employer shall not enforce the contractual retirement age unless:
If the employer elects to enforce the contractual retirement age, they must provide a reasoned written reply to the employee in line with the abovementioned requirements. This written reply must be provided within one month of receipt of notification.
The Bill includes certain exemptions to these measures. The proposed legislation is not intended to impact any existing Act or statutory instrument that contains a prescribed mandatory retirement age. An example of this exemption relates to those working in the military service where there is a restriction on the retirement age, as recognised in the Employment Equality Act 1998 (the “EE Act”).
The Bill proposes to amend the Workplace Relations Act 2015 to allow for employees to present a complaint to the Workplace Relations Commission relating to a contravention of the new provisions.
Where a relevant complaint has been brought before the Workplace Relations Commission, an adjudication officer may do one or more of the following:
Under the Bill, employers are prevented from penalising or threatening to penalise employees for proposing to exercise or having exercised their right to notify their employer of an intention to work beyond a contractual retirement age. Penalisation refers to any act or omission that affects an employee to their detriment. A non-exhaustive list of actions that may be viewed as penalisation are provided for in the Bill. These include suspension, demotion, intimidation, loss of opportunity for promotion and a change of location of place of work.
In effect, the aim of this proposed legislation is to bridge the gap between contractual retirement ages and the state pension age ensuring employees have a choice not to be left without an income between the end of their employment and the beginning of their state pension. If passed, the Bill will have no practical effect for employers who set their contractual mandatory retirement age at or higher than the state pension age of 66, as employees will be able to access their state pension on retirement.
Although only at the Bill stage, employers can start preparing for the drafting and ultimate enactment of this legislation. Comprehensive reviews should be undertaken to bring retirement policies in line with the proposed changes.
Employers should pay particular attention to the obligation to provide written responses to notifications within a month of their receipt. Further, employers should review their current justifications for enforcing contractual retirement ages and ensure that they are both reasoned and objective, and that the aims of such are legitimate, appropriate and necessary.
We, at KPMG Law, will continue to monitor developments of this matter. Our Employment Law Team, led by Aoife Newton, can advise on all aspects of employment contracts and the best approach employers should take in anticipation of these changes to the operation of retirement policies in Ireland. Please contact a member of the team for more information.
