Dáil Éireann Debate, Wednesday - 29 July 2020
53. Deputy Richard Bruton asked the Minister for Employment Affairs and Social Protection the ratio of persons aged 65 years of age and over in 2016 to the numbers aged between 25 and 64 years of age and to the numbers at work; her projection for these ratios in ten and twenty years’ time, respectively; and the implications for projected pension costs and the balance between spending and revenue in the social insurance fund. [17965/20]
View answerThe last Actuarial Review of the Social Insurance Fund was published in 2017. This considered projections of income and expenditure out to 2071. The projections underlying this report provide the following ratios.
In 2016, there were 3.9 persons between 25 and 64 years of age for every person aged 65 years of age and over. In 2026, this is projected to fall to 3.0 persons between 25 and 64 years of age for every person aged 65 years of age and over. The ratio is projected to further fall to 2.3 in 2036.
In 2016, the ratio of those at work to those aged 65 years of age and over was 3.5. This ratio is projected to fall to 2.7 in 2026 and further to 2.1 by 2036.
With this projected ageing of the population, the Actuarial Review noted the following in its findings: “Our projections indicate that in the absence of further action to tackle the shortfall, the excess of expenditure over income of the Fund will increase significantly over the medium to long term.”
The Actuarial Review projected the net present value of future projected shortfalls in the Social Insurance Fund at €335 billion (based on a real discount rate assumption of 1.5% per annum, over the period to 2070). Recent internal Departmental analysis projects that this figure would increase to €377 billion if the State Pension Age remains unchanged out to 2071.
Furthermore, the Irish Fiscal Advisory Council’s recently published “Long Term Sustainability Report” also estimated the projected cost of maintaining the State Pension Age at age 66. It gave an initial estimate at close to €575 million per annum in 2021, or 0.3 per cent of Gross National Income; rising further in 2028 to €1.5 billion per annum or 0.6 per cent of Gross National Income.
The public policy and social issues in relation to funding a sustainable and adequate State pension system are complex. Therefore, we are establishing a Commission on Pensions to examine a range of issues including contributions, calculation methods, sustainability, eligibility and intergenerational fairness.
It is intended that the Commission will report to Government by June of next year. In the meantime, pending its report and any decisions taken upon its recommendations, this Government has clearly stated that the state pension age will remain at 66 years and will not be increased to 67 in January 2021 as currently legislated for.
I trust this clarifies the matter for the Deputy.
