Dáil Éireann díospóireacht -
Wednesday, 22 Oct 2003

Vol. 573 No. 1

Written Answers. - Pension Provisions.

Joe Sherlock

Ceist:

114 Mr. Sherlock asked the Minister for Social and Family Affairs her proposals to raise the retirement age as per a recent recommendation from the Society of Actuaries in Ireland; and if she will make a statement on the matter. [24213/03]

Ciarán Cuffe

Ceist:

126 Mr. Cuffe asked the Minister for Social and Family Affairs her views on the recent report on future pension costs undertaken by the Society of Actuaries in Ireland. [24294/03]

Minister for Social and Family Affairs (Mary Coughlan)

I propose to take Questions Nos. 114 and 126 together.

At present just over 11% of our population is over age 65, against an EU average of 16%. The proportion of older people in our population will remain much the same for the next ten years after which it is projected to increase rapidly to 15% in 2021, 19% in 2031 and 28% in 2056. Ireland faces the same challenges as most other developed countries; the only difference is that these emerge later in our case and we have more time to prepare and to learn from the experiences of others. In the years ahead, we face two main challenges: to ensure that retired people have an adequate income, which as far as possible maintains their pre-retirement standard of living; and to ensure that these pensions are sustainable in the long run.

The Government has a clear strategy in place to meet these challenges which includes the National Pensions Reserve Fund, now standing at €8.4 billion, and significant increases in basic social welfare pensions with a target rate of €200 per week to be achieved by 2007.

The Government also aims to increase private pensions coverage amongst the workforce from a current level of 50% of the workforce to 70%. Personal retirement savings accounts, PRSAs, are the main instrument being deployed in pursuit of this objective and these have been available for the last six months. A joint EU Commission and Council report on national pensions strategies published earlier this year considered that Ireland has made good progress in ensuring the financial sustainability of the pension system while at the same time making provisions for increasing the adequacy of pensions.

The Government has no plans to increase the retirement age, as suggested by the Society of Actuaries. However, that is not to say that the important role increased workforce participation can play in ensuring sustainability is not recognised. The root of the challenge facing pension systems is a reduction in the active workforce and an increase in the number of pensioners. It is important that we encourage and facilitate those who wish to extend their working lives after normal pension age.

In this regard, we need to strike a balance between economic, social and individual requirements in that, ideally, a person who wished to continue working should not be obliged to retire. The relationship between tax, pension and benefits also needs to be monitored closely to see if it can provide a greater incentive to extend working life.

Question No. 115 answered with Question No. 111.

Question No. 116 answered with Question No. 77.