Donohoe: Delaying decision on State pension age will hit public finances

There are currently around four people of working age to support those 65 and over but this will drop to two by 2050
Donohoe: Delaying decision on State pension age will hit public finances

Minister for Finance Paschal Donohoe said: "We have a very young population at the moment and as we move through the coming years and coming decades, the age profile will shift and that will have an impact on all of our public services."

Delaying a decision on the State pension age could hit public finances in the years ahead, the Finance Minister has warned.

Paschal Donohoe has today published a report which puts forward a model of linking the State pension age to life expectancy as a way of significantly reducing the cost burden on the taxpayer.

The report points out that people are living longer while fewer babies are being born in Ireland and states that reforms will be required to bridge the financial gap.

Mr Donohoe said the report highlights the need for "serious policy considerations" in this area.

It comes after it was reported that Pensions Commission has recommended that the State pension age be increased to 67.

The Population Ageing and the Public Finances in Ireland report, produced by the Department of Finance, finds that slower revenue growth and rising expenditure will put significant pressure on the public finances in the future.

There are currently around four people of working age to support each person aged 65 and over. This number is expected to fall to just over two by 2050. 

It adds that age related expenditure is set to be €17 billion higher by 2050 and revenue increases will not be sufficient to fund all of these expenditure pressures.

Mr Donohoe said: "The report is a reminder of the key issues that the Government is already aware of, which are that we have a very young population at the moment and as we move through the coming years and coming decades, the age profile will shift and that will have an impact on all of our public services."

Financial sustainability

He said the Government will have to come up with a solution that is "financially sustainable" adding that "in any decision the Government makes there will be consequences to it".

Asked about possible increases in social welfare payments and the State pension in next month's budget, he said: "We will consider all of the options in relation to this.

"Over the last two budgets in particular, while it didn't contain a change in the pension or equivalent payments to the pension, it did contain other valuable changes to our social welfare programmes and policies.

"So my expectation is what government parties will want to see is a social welfare package that can make progress on many of the pressing issues and needs that we have in our society at the moment, particularly the risk of poverty," Mr Donohoe told RTÉ radio.

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