Dáil Éireann debate -
Tuesday, 2 Dec 2003

Vol. 576 No. 1

Written Answers. - Pension Provisions.

Breeda Moynihan-Cronin

Question:

83 Ms B. Moynihan-Cronin asked the Minister for Social and Family Affairs if she has proposals to raise the retirement age as per a recent recommendation from the Society of Actuaries in Ireland; and if she will make a statement on the matter. [28956/03]

Richard Bruton

Question:

93 Mr. R. Bruton asked the Minister for Social and Family Affairs his views on the action needed here to adequately provide pension cover in a future when there will be a higher proportion of older persons and when the average life expectancy at retirement will be considerably longer. [25836/03]

Jan O'Sullivan

Question:

112 Ms O'Sullivan asked the Minister for Social and Family Affairs the number of people currently in receipt of a State pension; her Department's assessment of the numbers of people likely to be in receipt of State pensions over the next decade; the provisions which are being made in that regard; and if she will make a statement on the matter. [28960/03]

Minister for Social and Family Affairs (Mary Coughlan)

I propose to take Questions Nos. 83, 93 and 112 together.

At the end of December 2002, there were 188,350 people receiving an old age contributory or retirement pension. A recent actuarial review of the social insurance fund, undertaken on behalf of my Department, estimated that the number of recipients of these pensions will increase to 255,000 by 2011 and to 321,000 by 2016. The increase will be balanced, to some extent, by a reduction in the number of people receiving the old age non-contributory pension. The numbers receiving this pension have declined by more than 20% in the past ten years which reflects improved social insurance coverage and increased labour force participation, particularly among women.

In common with other European countries, the population of Ireland is ageing as a result of a combination of increasing life expectancy and a declining birth rate. The decline in the birth rate is relatively recent and this, coupled with the effects of high emigration for much of the period up to the 1990s, has resulted in Ireland having the lowest proportion of older people in the EU – 11.2% aged 65 and over, as compared to the current EU average of 16.1%. The proportion of older people in Ireland will remain at much the same level for the next ten years after which it is projected to increase rapidly to 15% in 2021, 19% in 2031 and 28% in 2056. A similar situation exists in relation to the numbers at work relative to the number of pensioners.

Given that the situation will remain relatively stable for the next ten years or so, no particular measures are planned in that timescale. However, the Government has a clear strategy in place to meet these challenges which includes the national pensions reserve fund, now standing at €8.4 billion. The Government aims to increase private pensions coverage among the workforce from a current level of 50% to 70% partly through personal retirement savings accounts PRSAs and a general increase in the awareness of the need for having adequate pensions provision.

A joint EU Commission and Council report on national pensions strategies published earlier this year considered that Ireland has made good progress in ensuring the financial sustainability of the pension system while at the same time making provisions for increasing the adequacy of pensions. There is a target rate of €200 per week for the basic social welfare rate to be achieved by 2007.

The Government has no plans to increase retirement age as suggested by the Society of Actuaries. However, this is not to say that the very important role which increased workforce participation can play in ensuring sustainability is not recognised. The root of the challenge facing pension systems is a reduction in the active workforce and an increase in the number of pensioners. It is important that we encourage and facilitate those who wish to extend their working lives after normal pension age. Pensions will remain an important issue for this country, and the EU as a whole, and it will be necessary to monitor closely the situation on an ongoing basis in the years ahead.