The challenges facing the Irish pension system are significant. The population share of those aged 65 and over is expected to more than double between now and 2050, from 11% to 26%. People are living longer and healthier lives with average life expectancy set to rise even further in the future, up to 88 years for women and 83.9 for men. In contrast, the share of the working age population is projected to decline gradually from 68% to 58%. There are currently six people of working age for every pensioner and this ratio is expected to decrease to less than two to one by 2050. Therefore, the task of financing increasing pension spending will fall to a diminishing share of the population who are at work. Spending on public pensions, that is social welfare pensions and public service occupational pensions, is projected to increase from approximately 5.5% of GDP in 2008, to almost 15% by 2050. For these reasons, State pension age will be increased gradually to 68 years. This will begin in 2014 with the standardisation of State pension age at 66. The State pension age will be increased to 67 years in 2021 and to 68 in 2028. It is worth noting that until the early 1970s, the qualifying age for the State pension was 70 years. The legislative changes being included in the Social Welfare and Pensions Bill 2011 also fulfil one of the commitments in the EU-IMF programme of financial support for Ireland.
Additional information not given on the floor of the House.
The risk of fuel poverty is based on a combination of fuel price, income and efficiency of housing. My Department assists low-income households with heating costs through their basic payments and through the means-tested fuel allowance scheme. This scheme has been improved significantly in recent years, including through an extension in the number of weeks paid and increases in the rate. Fuel allowance is paid to people who are dependent on long-term social welfare and unable to provide for their own heating needs.
People affected by the increase in pension age who are not in employment may still qualify for the fuel allowance if they are in receipt of another qualifying social welfare payment, such as disability allowance. Under the supplementary welfare allowance scheme, a special heating supplement may be paid to assist people in certain circumstances who have special heating needs because of ill health or infirmity. In addition, exceptional needs payments may be made to help meet an essential, once-off cost that an applicant is unable to meet out of his or her own resources.
The Government is also committed to protecting vulnerable households from the impact of fuel poverty through investment in programmes to improve the energy efficiency of the housing stock and energy efficiency awareness initiatives such as the Keep Well and Warm booklet and accompanying associated website. Some 150,000 copies of the booklet have been distributed in recent years. The warmer homes scheme administered by the Sustainable Energy Authority of Ireland, SEAI, under the aegis of the Department of Communications, Energy and Natural Resources is the primary mechanism for alleviating the key underlying cause of energy poverty, namely, the thermal inefficiency of houses. Over 19,000 low-income houses were retrofitted in 2009 and a further 24,291 in 2010.
The Department of Communications, Energy and Natural Resources has overarching responsibility for the energy portfolio and it convened an inter-departmental-agency group on affordable energy to co-ordinate and drive Government policy in this area. My Department is represented on this group which was tasked with devising an energy-affordability strategy. I understand this is to be published shortly and it will set out existing and future approaches to addressing energy affordability.
Growing numbers of people want to work, or may need to work beyond State pension age. Increasing the State pension age is one of the ways in which we can sustain the pensions system, maintain the value of the State pension and support people to remain in the workforce.