Announcing an increase in the state pension age and the recession: Which mattered more for expected retirement ages?

In March of 2010, the Irish government announced that the age at which the state pension is paid would be raised to 66 in 2014, 67 in 2021 and 68 in 2028. Also during 2010, the economic news became increasingly bad as the full scale of the fiscal and banking crises in Ireland emerged. The question we address in this paper is whether expected retirement ages of Irish individuals aged 50 to 64 changed as a result of the policy announcement and/or the bad economic news. The data we use are from the Irish Longitudinal Study on Ageing (TILDA). Between late 2009 and early 2011, over 8,500 people aged 50 and over in Ireland were interviewed about a wide range of issues including standard socio-economic items such as labour force status, earnings and education. Respondents were also asked at what age they expected to retire. Our findings show that there was no noticeable break in expected retirement ages before and after 3 March 2010 (the day on which the policy announcement was made). However, there was a clear shift of people into the categories don't plan to retire and do not know before and after September 30 2010. This was the day that the full scale of the banking crisis emerged (named by the media as Black Thursday) and was followed by the set of events which led to the bailout of November 2010. Similarly, there was a shift away from modal expected retirement ages after that date.