Introducing the Green Paper on pensions back in 2007, the then Minister for Social & Family Affairs had this to say:“We are living longer, and in better health….However, while Ireland currently has a younger population than most European countries, over the longer term the impact of population ageing in this country will be considerable. According to new data in this Green Paper, the number of people of working age for each person over age 65 will fall from 6 in 2006 to 2 in 2050. Taking account of the fact a proportion of those of working age will not be in employment, the ratio of workers to people aged 66 and over in 2050 will be 1.5 to 1…”
1.5 workers for every individual entitled to a social welfare benefit….astonishing statistic, isn’t it? Here are a few more:
· The population aged 65 and over will increase by 59% by 2021 and by a further 142% by 2061.
· Since 1998, the proportion of pensioners receiving a state pension has increased from 61% to 71% in 2000 and is projected to increase to 98% by 2056.
· Adequacy is primarily a private sector issue: most public service pension schemes will provide benefits after long service which, when added to any social welfare pension entitlement, will provide a retirement income at least equal to 50% of pre-retirement income.
· Current costs of providing state pensions stands at 3.2% of GNP - this figure is projected to grow to 10.1% in 2060.
These statistics are just some of the factors contributing to an enormous headache for the State and are the reasons behind the publication of 4 major papers on pensions, culminating in the National Pensions Framework in 2010. However, the current difficult times have caused our great public servants to ignore the ticking time bomb outlined above, and they have proceeded to roll back incentives that were introduced to increase private pension coverage. The threat of an annual levy on pension funds together with a further reduction of benefits represents the subjugation of tomorrow’s concerns in order to pay for today’s.
This has happened once before in our history. In a time of great calamity our ancestors ate the seed potatoes and were left bereft shortly thereafter. We should avoid doing the same. Otherwise the only thing we will have learned from history is that we have not learned from history.
