People who can retire at 61 will be given a financial incentive for every year they choose to continue working until 65, according to government plans.

The scheme is open to workers in the private sector, who would have paid 35 years of social security contributions and eligible to retire at 61.

Those who continue working until 62 will later on receive an increase of five per cent in their pension.

The scale increases every year. Somebody who works until 63 would receive an increase of 5.5 per cent for the second year, over and above the five per cent of the first year. The increase for the fourth year is six per cent and the fifth year, 6.5 per cent.

This means that somebody who continues to work until 65 will get a cumulative pension increase that starts at five per cent and potentially rises to 23 per cent in the last year.

* 1st year: 5% increase
* 2nd year: 1st year increase + another 5.5% increase
* 3rd year: 1st and 2nd year increases + additional 6%
* 4th year: 1st, 2nd, 3rd year increases + 6.5%

Social Solidarity Minister Michael Farrugia said the scheme was a recommendation by the Pensions Working Group, an advisory body, and included in the last Budget.

Dr Farrugia said the scheme was intended to encourage older workers continue in the job market for longer before going out on a pension. 


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