At the end of December 2003 there were 200,479 people receiving an old age contributory or retirement pension and 86,733 receiving an old age non-contributory pension. An actuarial review of the social insurance fund, undertaken on behalf of my Department in 2002, projected that the number of recipients of the old age contributory and retirement pensions will increase to 255,000 by 2011 and 321,000 by 2016. To some extent the increase will be balanced by a reduction in the number of people receiving an old age non-contributory pension. The numbers receiving this pension have declined by over 20% in the past decade and reflects improved social insurance coverage and increased labour force participation, particularly amongst women.
In common with other European countries, the population of Ireland is ageing as a result of a combination of increasing life expectancy and a declining birth rate. The decline in the birth rate is relatively recent and, coupled with the effects of high emigration for much of the period up to the 1990s, has resulted in Ireland having the lowest proportion of older people in the EU at 11.2% aged 65 and over. The current EU average of 16.1%.
The proportion of older people in Ireland will remain at broadly the same level for the next ten years after which it is projected to increase rapidly to 15% in 2021, 19% in 2031 and 28% in 2056. A similar situation exists for the number of pensioners relative to the numbers at work.
Ageing presents the same challenge to Ireland in meeting growing pension costs as to other countries except that we have a longer period to prepare for its full impact. The population projections suggest that no special measures are required in the timescale envisaged by the Deputy. The Government is making preparations through the national pensions reserve fund to part fund State pensions costs from 2025 onwards.
Pensions have been an important issue at EU level in recent years. This is not surprising given that the challenges facing pensions systems are more immediate for other member states. The EU has assessed national pensions systems under agreed objectives in the area of adequacy, financial sustainability and modernisation. A joint EU Commission and Council report was published in 2003. It found that Ireland has made good progress in ensuring the financial sustainability and adequacy of our pensions system.
The report concluded that our system appears to be, in broad terms, financially sustainable despite projected major increases in future pensions expenditure. The matter will be kept under review.