Cost of long-term care to hit Ireland

SPENDING on pensions and health care for an ageing population will hit Ireland harder than most other EU economies, according to figures released by the Organisation for Economic Co-operation and Development.

By 2025 the share of GDP spent on health, long-term care and pensions will be 5.6 percentage points over the 2005 levels but by 2050 this will have increased to 14.4 percentage points. This growth will be the third highest among the EU’s 13 wealthiest members and double that of the US. Pensions will account for the largest share at 6.5 percentage points, while health care will be at 4.0 percentage points. The cost of long-term care at 3.8 percentage points by 2050 will hit Ireland harder than other countries, including Japan and the US.

Aongus Horgan, of the Irish Pensions Board, said the figures reflect their assessment that while there are 4.3 people working for each person over the age of 65, this will fall to 2.7 people in 2026. By 2056 there will be just 1.4 people to support each retired person. As Ireland has a slightly younger population than most EU countries, a lower proportion of GDP is being spent on pensions and long-term care. But the spending pressure on the country’s resources from aging will gradually increase, he added.

The Green Paper on pensions prepared for the Government by the Pensions Board will be dealt with by the incoming government, which will have to make decisions on issues such as whether to make private pensions mandatory and whether to extend the working age.

The six monthly report also noted that while output expanded by 6% last year, the housing boom is over. It predicted that the rate of growth of GDP will slow to 5.5% this year and 4.1% in 2008 as consumption weakens and housing investment falls.