State faces pensions crisis as retirees set to double

THE ratio of retired people to workers will more than double over the next 50 years, leaving the State facing a dramatic 150% rise in the cost of pensions.

Ireland’s ageing population means there will be less than two working people to every pensioner by 2050. At present, there are five working people to a pensioner.

The projection was made yesterday by Minister for Finance Charlie McCreevy, who said pensions will begin to put an increasing strain on State funds over the next few decades.

And while pensions now cost the Exchequer 5% of Gross National Product (GNP), that will rise dramatically to 12.5% by 2056.

The projections confirm in Ireland a pattern already obvious in most other EU states. Falling birth-rates combined with longer-living populations will put increasing pressure on State pension funds. Italy already needs two million extra workers if it is to maintain its level of pension funding in the future.

The minister was speaking yesterday at the publication of the Public Service Superannuation Bill. The bill is designed to tackle the pensions problems and incorporates the bulk of recommendations made in the report of the Commission on Public Service Pensions.

The main measures, first announced in December’s Budget, will be to set the minimum retirement age at 65 (55 for entrant gardaí, prison officers and fire brigade personnel). There will also be no compulsion for people to retire at 65.

The favourable pension arrangements for TDs, senators and ministers will also be brought to an end with the bill. New Oireachtas members will now have to wait until they are 65 to collect their pension, unlike present members who will be entitled to their pension upon losing their seats.

“We must recognise we have a pensions problem. The only difference between the demographic trends in Ireland and the rest of the EU is that the problem hits us a bit later,” said Mr McCreevy.

“Either we take modest steps now or we will have to take much more difficult measures in future, like many of our EU partners.”

It was unfortunate no consensus was reached with public service unions on retirement age, he added.