Dáil Éireann Debate, Thursday - 4 May 2017
83. Deputy Michael McGrath asked the Minister for Finance the respective nominal amounts for each item under total age related expenditure one to five years of age in table 20 on page 42 of the stability programme update April 2017, for each of the years 2013, 2020, 2030, 2040, 2050 and 2060 in tabular form; and if he will make a statement on the matter. [21265/17]
View answerThe Economic Policy Committee (EPC), an official level EU Committee, undertakes an assessment every three years reviewing the impact of long-term demographic trends on the public finances of Member States.
Table 21 on page 43 of the Stability Programme Update, published on May 2nd, sets out the long-term expenditure projections as published in the 2015 Ageing Report, under 5 broad headings; total pension expenditure, health care, long-term care, education expenditure and other age-related expenditures.
All of these projections were expressed as a share of GDP in the report and the corresponding nominal amounts were not published as part of the 2015 Ageing Report. This is the more appropriate approach to assess long-term trends as these projections in particular require a scaling factor to control for, inter alia, inflation and population growth.
As can be seen from the figures in table 21, reproduced below, unfavourable demographic trends in the coming decades will have significant implications for the economy and the evolution of the public finances.
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Table 21: Long-term spending projections |
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|
% of GDP unless otherwise stated |
2013 |
2020 |
2030 |
2040 |
2050 |
2060 |
|
Total age-related expenditure [items 1-5] |
22.1 |
22.9 |
23.9 |
24.6 |
25.6 |
23.9 |
|
1 Total pension expenditure |
7.4 |
8.0 |
9.1 |
10.0 |
10.0 |
8.4 |
|
: Social security pensions |
5.5 |
5.5 |
6.4 |
7.4 |
8.0 |
7.0 |
|
: Gross occupational pensions (Public Service) |
1.8 |
2.5 |
2.7 |
2.6 |
2.0 |
1.4 |
|
2 Health care |
6.0 |
6.3 |
6.9 |
7.3 |
7.3 |
7.2 |
|
3 Long-term care |
0.7 |
0.7 |
0.9 |
1.1 |
1.3 |
1.4 |
|
4 Education expenditure |
6.0 |
6.4 |
5.8 |
5.2 |
6.0 |
5.9 |
|
5 Other age-related expenditures* |
2.1 |
1.5 |
1.2 |
1.0 |
1.0 |
1.0 |
|
Underlying Assumptions |
2013 |
2020 |
2030 |
2040 |
2050 |
2060 |
|
Labour productivity growth |
-0.1 |
1.4 |
1.6 |
1.5 |
1.5 |
1.5 |
|
Potential GDP (growth rate) |
0.5 |
1.4 |
1.8 |
1.4 |
1.9 |
2.7 |
|
Participation rate males |
76.9 |
74.5 |
72.1 |
73.5 |
73.9 |
72.9 |
|
Participation rate females |
62.7 |
63.1 |
63.1 |
64.1 |
63.4 |
63.1 |
|
Total participation rates aged 15-64 |
69.7 |
68.8 |
67.6 |
68.8 |
68.7 |
68.2 |
|
Share of population over 65 years old |
12.4 |
15.0 |
19.4 |
23.1 |
24.9 |
21.4 |
|
Economic old-age dependency ratio |
28.7 |
34.5 |
43.9 |
53.9 |
63.0 |
52.5 |
Source: Economic Policy Committee and European Commission using Commission forecasts out to 2060. As reported in 2015 Ageing Report Economic and Budgetary projections for the EU28 Member States 2013-2060. Based on EUROPOP2013 population projections. Baseline in the 2015 Ageing Report was 2013.
Note: Participation rates refer to 15-64 cohorts. Economic old-age dependency ratio refers to inactive population over 65 as a share of employed population aged 15 to 64.
* Unemployment benefit
A range of policy measures have been undertaken over recent years to address the budgetary implications of population ageing including legislated step-increases in the state pension age over time, the planned introduction of a total contributions approach for the State Pension (Contributory), reform of public service pension entitlements and moves to place long-term care expenditure on a more sustainable footing.
The Department is committed to monitoring long-term demographic trends and will play an active role in the publication and subsequent analysis of updated figures in the 2018 Ageing Report.
