The age at which people receive the State pension is set to remain at 66 under plans set to be finalised by the Government in the autumn.

Workers will also be able to defer their pension until the age of 70 after a broad agreement was reached among the Government parties on the issue.

Those who work beyond the age of 66 will receive a higher pension rate when they opt to retire.

This is based on the fact that they will have paid more PRSI and will be in receipt of their pension over a shorter period.

It is understood that Minister for Social Protection Heather Humphreys brought the proposal to a Cabinet sub-committee meeting recently.

The plan detailed what was termed a "flexible pension age" which would enable people to receive the State pension at 66, but also to "build up" a higher payment if they continue working beyond this age.

This model is in place in some other countries already, including Estonia.

The final details of the proposal are still being worked on but the sense within Government is that this work is progressing well.

This policy agreement in Government is likely to result in higher PRSI rates generally over time.

However, sources have said that given the cost of living pressures on households it is not anticipated that the rates would be hiked in the short-term.

The Irish Congress of Trade Union has given a cautious welcome to the plan comments

ICTU’s Dr Laura Bambrick said: "Facilitated workers who are willing and able to work beyond age 65, while also maintaining the pension qualifying age at 66 for people who want to retire is a more balanced and fairer approach to encouraging longer working lives than the previous policy of pushing up the pension age to 68 for everyone.

"Congress has long argued there is a sizeable and growing number of workers who are forced to retire earlier than they would wish because of the age of retirement in their employment contract, typically 65.

"Congress supports in principle the planned deferral scheme which will provide for a higher weekly State pension if workers delay drawing down their State contributory pension at 66 on an annual basis up to age 70.

She said ICTU would "continue to seek a facility for workers in manual jobs who have a long social insurance contribution record to be able to access their full State pension at an earlier age than 66".

Proposals must be 'fair'

Age Action welcomed the plan to allow flexible access to the State Pension, but said care is needed to ensure that the proposals are fair and do not reinforce existing inequalities in the system.

Senior public affairs and policy specialist at Age Action, Dr Nat O'Connor said "the proposal that people can choose to retire later in exchange for a higher annual State Pension rate is a response to one recommendation from the Pensions Commission’s report".

"However, that report makes dozens of findings, and it will be important to see the full detail of what the Government is proposing.

"The Government missed their self-imposed deadline to publish a response to the Pensions Commission report six months after it was published, and this announcement is only a partial response to what is a complex area of public policy. It would be wrong for the Government to legislate for these proposals without first consulting with all stakeholders."

Sinn Féin spokesperson on Enterprise, Trade and Employment Louise O'Reilly said it was welcome that the government parties "abandoned previous intentions to raise the pension age beyond 66", but they needed to "go further and give workers the right to retire at 65".

"People who have had a lifetime working on their feet in hospitality or hairdressing, or doing hard labour on construction sites for example, simply cannot be expected to continue working beyond the pension age.

"We absolutely support flexibility for workers who wish to continue working beyond the pension age but that should be on their terms. Nobody should be pressured into working beyond the age they are entitled to a state pension if they do not wish to do so."