Dáil Éireann Debate, Thursday - 31 March 2022
312. Deputy Pearse Doherty asked the Minister for Social Protection further to deficit projections for the Social Insurance Fund provided in the report of the Pensions Commission, if she will further disaggregate the forecast deficit by year, in each of the years to 2030. [17202/22]
View answer313. Deputy Pearse Doherty asked the Minister for Social Protection further to the revenue projections provided in the report of the Commission on Pensions, the revenue raised by each percentage point increase in each of the years 2023 to 2040 in class S PRSI and class A employers' PRSI at both the lower and higher rates. [17203/22]
View answer314. Deputy Pearse Doherty asked the Minister for Social Protection the economic growth rates upon which the deficit projections for the social insurance fund provided in the report of the Pensions Commission are predicated, disaggregated by year from 2023 to 2040. [17204/22]
View answerI propose to take Questions Nos. 312 to 314, inclusive, together.
The Pensions Commission was established in November 2020 to examine the sustainability of the State Pension system and the Social Insurance Fund, in fulfilment of a Programme for Government commitment. The Commission was an independent body comprised of knowledgeable and experienced academics, pension experts, members of civil society and representatives of workers and employers. The Commission’s terms of reference were very demanding, and every effort was made to make sure that they were met. The Commission established a Technical Sub-Committee to examine financial, actuarial and demographic information. The Sub-Committee prepared four Working Papers which covered Population and Labour Force Projections; Expenditure Projections; Poverty Prevention and State Pensions; and Benchmarking and Indexation.
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 forecast deficit in the Social Insurance fund used by the Commission is set out in the table below for the years to 2030 -
|
Year |
Deficit (€Bn) |
|
2022 |
0.30 |
|
2023 |
0.51 |
|
2024 |
0.71 |
|
2025 |
0.91 |
|
2026 |
1.22 |
|
2027 |
1.62 |
|
2028 |
1.72 |
|
2029 |
2.03 |
|
2030 |
2.36 |
As part of updating the work on the Actuarial Review of the SIF, KPMG updated macro-economic parameters to reflect the long-term projections run by the European Commission and sent to Member States, including Ireland, to form the basis of the 2021 Ageing Report.
The economic growth rates used for the period 2023 to 2040 (i.e. the assumption percentages) are set out in the table below.
|
Years |
Real GDP Growth |
Price Inflation |
Real Earnings Growth |
Unemployment Rate |
Employment Growth |
|
2022-2025 |
3.6 |
1.7 |
1.7 |
6.1 |
1.3 |
|
2026-2030 |
1.7 |
2 |
1.3 |
6.6 |
0.8 |
|
2031-2035 |
1.8 |
2 |
1.2 |
6.8 |
0.6 |
|
2036-2040 |
1.8 |
2 |
1.5 |
6.7 |
0.2 |
The revenue projections used in the Report of the Commission on Pensions in relation to Class S and Class A PRSI are set out in the table below for the years 2023 to 2040. The Commission did not disaggregate employer and employee rate changes (i.e., they increased both in parallel).
|
Year |
Class A +1% EE, ER |
Class S +1% |
|
2023 |
1.7 |
0.2 |
|
2024 |
1.8 |
0.2 |
|
2025 |
1.8 |
0.2 |
|
2026 |
1.9 |
0.2 |
|
2027 |
1.9 |
0.2 |
|
2028 |
1.9 |
0.2 |
|
2029 |
2.0 |
0.2 |
|
2030 |
2.0 |
0.2 |
|
2031 |
2.0 |
0.2 |
|
2032 |
2.1 |
0.2 |
|
2033 |
2.1 |
0.2 |
|
2034 |
2.2 |
0.2 |
|
2035 |
2.2 |
0.2 |
|
2036 |
2.2 |
0.2 |
|
2037 |
2.3 |
0.2 |
|
2038 |
2.3 |
0.2 |
|
2039 |
2.4 |
0.2 |
|
2040 |
2.4 |
0.2 |
It is important to note that all figures shown here are subject to rounding.
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 will be bringing a recommended response and implementation plan to Government in April.
As the bedrock of the pension system in Ireland, the State Pension 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 matters for the Deputy.
