It also believes that the cost of paying State employees potentially for longer than originally anticipated will be offset by delays in having to make lump sum payments to which staff are eligible on retirement.
He said the government now proposes to allow most employees to work up to 70 years of age if they choose to do so, though he stressed that they will still be free to retire at the minimum retirement age if they so wish.
The advocacy group for older people, Age Action argued on Wednesday that the many thousands of workers in the private sector who will not benefit the public service reforms announced by the Government can not be left behind.
In relation to the private sector, a department spokesperson said it recommended employers should take steps to ensure their policy on retirement age is clearly articulated.
However the Government's new reforms for the public service has already led to questions about what it plans to do about workers in the private sector.
Workers who have already paid 40 years of pension contributions entitling them to a full pension but opt to stay on for longer will continue to pay contributions, but will not accrue further pension entitlements.
He said legislation is now stuck in the Oireachtas that would abolish mandatory retirement clauses, including in the private sector.
Minister for Public Expenditure Paschal Donohoe announced interim arrangements which, pending new legislation, will allow public servants who reach the age of 65 and who wish to remain working, to retire and be rehired so that they remain in employment up to the State pension age, which is now 66.
Head of Advocacy and Communications at Age Action has said it welcomes the Government's proposal.
"This announcement will mean nothing to many thousands of older workers in the private sector who will not benefit from these changes", he said.
"By comprehensively addressing compulsory retirement, it also allows a large group of people overcome the current anomaly of not being able to receive their state pension until a year after retirement".
He said he would like to see the measure extended to private sector workers.