Fianna Fáil 'not going there' as it vows to keep preferential pensions deal for State employees

A major row has erupted as it emerged that the majority of public servants will not be affected by the increase in the state pension age.

Many public service employees can retire early and receive a supplemental payment until the state pension kicks in. In contrast, private sector workers who are legally obliged to retire at 65 cannot claim the state pension until they are 66.

At its press conference, the party's finance spokesman Michael McGrath said it would be unfair to seek to level the playing field by removing an entitlement unilaterally at political level.

He said any change would only come as part of public sector pay talks.

Mr McGrath said decisions that would shape pension policy for 30 years should not be made on the back of an envelope or in the heat of an election campaign.

Mr McGrath was pressed on Fianna Fáil's position on the pension age - an issue that has featured prominently during the first week of the election campaign - as he launched the party's election promises on personal taxation.

The party has committed to undertaking what Mr McGrath described as a "comprehensive" review of the state pension if elected.

A plan to increase the qualifying age from 66 to 67 next year would remain on hold until the review was completed, Mr McGrath said.

In the interim, he said a transitional pension would be paid to those private sector workers who are contractually required to retire at 65 but who currently have to claim job seekers' allowance - which pays less than the pension - until they become eligible for the state pension a year later.

Under existing plans, the pension age is set to increase to 68 in 2028.

Justifying the need for a review, Mr McGrath told the event in Dublin: "It's not about kicking it down the road, it's about getting it right and it's about being fair to people.

"It is complex issue.

Anyone who does the back-of-an-envelope calculation and says they want to change pension policy for the next 20 or 30 years in Ireland is not being fair to the Irish people and is not being honest with them.

"So there are challenges around sustainability. We know what the demographic trends are and we need to deal with that. But you don't do that in the heat of a campaign and set out fundamental changes to what has been the established policy for a period of time. So we are making it very clear that there will be a comprehensive review."

Mr McGrath unveiled a €1.3bn package of tax measures today. He said it is "very much aimed at middle Ireland".

Among the proposals is a plan to reduce the 4.5% Universal Social Charge rate to 3.5%.

If elected, Fianna Fáil would increase the standard rate income tax band by €3,000 for an individual and €6,000 for a couple.

The party has also pledged to set more funds aside for unexpected financial shocks.

It will increase the current annual contribution to the country's "rainy day fund" from €500m a year to €750m.

Mr McGrath said: "It will be an important reassurance for investors.

"For those who buy government bonds and so on, to see that Ireland has very much learned its lessons and is putting money aside for exceptional measures that may arise, economic shocks, challenges to the stability of the state and any period of severe economic downturn."

He described the tax proposals as "modest, affordable and sustainable", and acknowledged Fine Gael has made more generous commitments.

But he insisted his political rivals have a track record of making promises they do not keep.

"We're not getting involved in an auction with Fine Gael in relation to income tax cuts," he said.

"We know their form - they'll promise the sun, moon and stars and they'll drop it after the election.

"That's exactly what they did in 2016 - so I don't think people will believe them."