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State Pensions

Dáil Éireann Debate, Wednesday - 23 March 2022

Wednesday, 23 March 2022

Questions (134)

Bernard Durkan

Question:

134. Deputy Bernard J. Durkan asked the Minister for Social Protection the total number of persons currently in receipt of the State (contributory) pension; the extent to which this number is likely to fluctuate in the future; and if she will make a statement on the matter. [15390/22]

View answer

Written answers

The Statistical Information on Social Welfare Services Annual Report 2020 was published by my Department on the 9th August 2021. This report stated that there were 449,442 recipients of the State Pension (Contributory) at the end of 2020, a rise of 18,218 (or 4.2%) compared to the previous year. It also showed an increase of 152,447 (51.3%) in State Pension (Contributory) recipients in the 9 years since 2011. Please see the table below for more information on the number of State Pension (Contributory) recipients and beneficiaries for 2011 to 2020.

State (Contributory) Pension

The number of State Pension (Contributory) recipients continued to increase during 2021. My Department’s administrative records indicate that there were 468,734 recipients at the end of 2021. It is clear from my Department’s statistics and records that the number of State Pension (Contributory) recipients has increased significantly over the past decade.

The Deputy will be aware that the Pensions Commission’s report was published on the 7th October 2021. The Commission’s Report established that the current State Pension system is not sustainable into the future and that changes are needed. It set out a wide range of recommendations including enhanced pension provision for long-term carers, gradual increases to the State Pension Age, aligning retirement ages in employment contracts with the State Pension Age, PRSI base broadening measures, and allowing a person to continue paying PRSI contributions past State Pension Age to improve their social insurance record for State Pension (Contributory) purposes.

The Commission’s Report is a comprehensive report that takes account of an assessment of various analyses of population, labour force and expenditure projections; an examination of international approaches; and responses to an extensive consultation process. The report, Technical Sub-Committee's working papers, infographics and submissions made to the Pensions Commission are available on the website, pensionscommission.gov.ie.

The Commission carefully considered the scale of the fiscal sustainability challenge facing the State Pension system and the Social Insurance Fund, based on analysis from a range of sources, including the Department of Finance and the Irish Fiscal Advisory Council, demographic projections from the Central Statistics Office, and material from the Commission’s public consultation process. KPMG updated the most recent Actuarial Review of the Social Insurance Fund (published in 2017) in order to have up-to-date projections of shortfalls in the Social Insurance Fund.

The Commission and its Technical Sub-Committee analyses indicate that:

- The number of working age people is projected to increase by 9% from 2021 to 2051 – increasing from 3,243,500 to 3,549,700. The number of people aged 65+ is projected to double from 2021 to 2051 – from 743,100 to 1,562,500 (CSO). Demographic projections show that the coming decades will be marked by a transition towards a much older population structure. Accordingly, Ireland’s population is ageing.

- Thankfully, people are living for longer and are healthier than previous generations. A man aged 65 has a life expectancy of 18.3 years, while a woman aged 65 has a life expectancy of 21 years (CSO figures for 2016). Life expectancy has increased by approximately 5 years in the last two decades and is expected to increase by a further 3 years in the next two decades to 21.9 years for a man aged 65 and 24 years for a woman aged 65 by 2041. This shows that the duration of State Pension payments has been increasing steadily over time and is projected to increase further.

- The ratio of the working age population to the older population is also projected to change. In 1991, there were 5 working age people for every pensioner. At the moment, this ratio is about 4.5 working age people to every pensioner. By 2031, this is projected to fall to 3.5 working age people to every pensioner and by 2051, to 2.3 working age people to every pensioner. The projections show that there will be a relatively smaller proportion of working age people in the coming decades financing State Pension payments for an increasing number of pensioners.

These projected demographic changes indicate significant increases in the number of future State Pension (Contributory) recipients which will impact on State Pension related expenditure. Analysis carried out by KPMG for the Pensions Commission projected that, on a no policy change basis, the Social Insurance Fund will have an annual deficit of €2.3 billion by 2030. This will increase to reach €13.4 billion annually by 2050 and €21.1 billion by 2071. KPMG also found that by 2045, expenditure on the State Pension (Contributory) alone will exceed projected Social Insurance Fund income.

In the interests both of older people and future generations of older people, this Government intends to consider the comprehensive and far reaching recommendations in the Pensions Commission’s Report very carefully and holistically. The views of the Joint Oireachtas Committee on Social Protection, Community and Rural Development and the Islands and the Commission on Taxation and Welfare will be considered as part of the Government’s deliberations over the coming weeks. My officials are also examining each of the recommendations and consulting across Government through the Cabinet Committee system. I think it is really important that we complete that work before reaching conclusions on any recommendations. I will be bringing a recommended response and implementation plan to Government in April.

It would be a strategic risk not to plan and provide for projected demographic changes, not least in terms of income adequacy for older people. The State Pension is the bedrock of the pension system in Ireland. It is very effective at ensuring that our pensioners do not experience poverty. This Government is committed to ensuring that this remains the case for current pensioners, those nearing State Pension age and today’s young workers including those who are only starting their careers.

I hope this clarifies the matter for the Deputy.

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