Public servants will be able to stay at work up to the age of 70 if they so choose, once new legislation is signed into law by President Michael D Higgins in the coming days.
At present, public servants have to retire by 65 at the latest, despite the fact that new age for qualifying for the State pension is 66.
This can leave workers with a gap in retirement income. In addition, some employees wanted to continue in their posts beyond 65.
While there were some interim measures allowing staff to be re-hired until the age of 66 when the State pension kicked in, they treated staff as newly employed, resulting in a drop in income despite doing the same work.
Unions had lobbied for workers to be allowed to stay on until 70, which they will now be able to do on their existing pay and conditions under the Public Service Superannuation (Age of Retirement) Bill.
There had been fears that implementation of the legislation could be delayed until next year, which would have meant that State employees hitting the age of 65 over the Christmas break would have to retire.
However, the bill completed its passage through the Seanad today, and will become effective as soon as it is signed by President Higgins, which is likely to happen over the Christmas break.
The largest public service union Forsa welcomed the legislation noting that once it comes into effect, any public servant covered by the legislation who has not already reached their compulsory retirement age will have a new compulsory retirement age of 70, and the choice to work to that age if they so wish.
Forsa Senior General Secretary Shay Cody has requested the Department of Public Expenditure and Reform to issue a circular so that staff would fully understand the new rules.
He also said that if the legislation passes this week, all public service employers should advise staff due to reach their 65th birthday during the holiday period that they will no longer be required to retire on that date.
Mr Cody said it would be unthinkable if it were to emerge after the holiday break that any public servant was obliged to retire based on the old legislation.