Vol. 573 No. 1
105 Mr. Gilmore asked the Minister for Social and Family Affairs if her attention has been drawn to a recent report (details supplied) produced for the Combat Poverty Agency, which shows that Ireland spends less on old age than any other EU country; if she will take action to redress this situation; and if she will make a statement on the matter. [24205/03]
The report to which the Deputy refers, Irish Social Expenditure in a Comparative International Context, by Virpi Timonen, compares social expenditure in Ireland with that of other European and developed countries. As in most other countries, old age expenditure in Ireland accounts for the largest part of social protection expenditure. However, at 25%, this is significantly less than the EU average of 46%.
The main reason for this discrepancy is that the proportion of people aged 65 and over in Ireland as a proportion of the working age population, aged 15 to 64, was a third lower than the EU average and this gap is projected to continue for at least the next decade. The projection for 2010 is an increase of just 0.5% up to 17.3% for Ireland and a 3% increase for the EU 15 up to 27.3%, which by then will leave a 10% gap.
A second key reason relates to the historic development of pensions in Ireland. Social insurance was extended to all income earners over recent decades, which means that a high proportion relative to other countries have to rely on social assistance pensions or have no State pension because their means are too high. Ireland, unlike most EU countries, relies fully on occupational and private provision to provide supplementary pension cover. On the other hand, coverage of occupational and private pensions in Ireland is still around 50% and the aim is to increase that coverage to 70% as recommended by the Pensions Board. Expenditure of this kind on private pensions may not be fully captured in the social protection statistics compiled by EUROSTAT.
The current situation as it applies to the aged will change significantly in the decades ahead. The ageing of the Irish population will mean that the gap between our old age dependency ratio and that of the EU 15 will close progressively. The vast majority of those retiring will qualify for non-means tested pensions under social insurance as a result of the progressive extension of coverage in recent decades. By the late 2020s, very few pensioners will have to rely on social assistance. Many occupational and personal pension schemes will have matured and an increasing proportion of pensioners will have supplementary pensions.
The Government's objective is to increase social welfare pensions in real terms and the target level is €200 by 2007. We will also increase the amount payable for pensioner spouses currently in receipt of qualified adult allowance to the full non-contributory pension rate and implement improvements in the widow's/ widower's pension.
To ensure the financial sustainability of the schemes, considerable resources are being set aside in the pension reserve fund, which already stands at €8.4 billion, to meet the growing liabilities arising from the increasing numbers of pensioners and the real increases in pension payments. A major campaign is under way to increase supplementary pension cover to the target level of 70% of income earners, mainly with PRSAs.
