Retirement age 'should rise to 75'
Raising the retirement age to 75 would be the most effective way of avoiding a pensions crisis in Ireland, it was claimed today.
Falling birth rates and increasing life expectancy meant that dramatic changes would have to be made by 2050, the Society of Actuaries said.
By then there will be just two working people for every pensioner, compared to six at the moment, it estimated.
The news comes just a day after another group warned the Republic was facing a “pensions timebomb“.
Spokesman for the society David Harney said: “We were quite surprised by the increases in the retirement age that would be needed to have a meaningful impact.”
He said that the changes suggested by the group could be implemented gradually over the next 50 years.
“The number of pensioners is going to increase from just over 400,000 at the moment to over 1.25 million in 2050,” he said on the radio.
“Over that period of time there is going to be a meaningful increase in the number of pensioners but the number of people in the working population is going to stay consistent at 2.6 million.”
Mr Harney said the cost of paying state pensions was currently about 3% of GDP but would rise to 8% of GDP in 2050.
The most realistic option was to raise the retirement age to 75.
The only alternatives were increasing the country’s productivity or reducing the amount paid to pensioners.
If the shortfall was to be funded by income tax, it would mean raising the tax by 15%.
Mr Harney added that although Ireland has a National Pension Reserve, most of this would go towards paying public sector pensions.
For some time experts have been warning a pensions crisis is looming in Ireland.
Yesterday a pensions conference heard that nearly a quarter of a million Irish employees with defined contribution pension schemes were sitting on a potential time bomb.
Raymond McKenna, of the Association of Pension Funds, warned that some people should be paying up to 25% of their income into their pensions.
Responding to the recommendation, the Tánaiste, Mary Harney, said she was not in favour of raising the retirement age to 70 or 75.
Ms Harney admitted that the growing number of elderly people in Ireland would create major pension problems in the future, but she said she would not support a significant increase in the retirement age.
The Tánaiste said it would be improper to expect people to work more or less until the day they die.
SIPTU spokesperson Roisin Callender echoed Ms Harney’s comments, saying the younger generation would be strongly opposed to any increase in the retirement age.
However, Ms Callender said she believed some type of reform was necessary to ensure that the State could continue to pay adequate pensions into the future.
