THE current baby boom will help ease fears of a pensions’ timebomb in future, a senior civil servant has said.
A report by the Comptroller and Auditor General (C&AG) last year predicted pensions for state employees will cost €116bn over the next 60 years, prompting concern over the Government’s ability to foot the bill.
Robert Watt, secretary general at the Department of Public Expenditure and Reform, described the figure as “frightening” and said €116bn “looks like a scary number”.
But he told the Dail’s spending watchdog, the Public Accounts Committee, today that Ireland’s baby boom means the Government may be better able to meet its pension obligations in future.
“The good news on that is that babies are remarkably popular. If people of that age go on producing babies, that will help,” he said in response to questions from Fine Gael TD Eoghan Murphy.
“Small changes to fertility rates have a very dramatic affect on these costs.”
Observers hope the increase in births will mean the Government has a larger tax base in future years when the number of pensioners is set to grow due to increased longevity and advances in modern medicine.
Mr Watt said his department and the Office of the C&AG were conducting another review to monitor the amount needed for future pensions.
“It is a very important exercise and it will be interesting to see what the result is,” said Mr Watt.
“It is an issue and definitely a challenge in terms of managing costs. We can’t be complacent about it. [But] it is not quite as daunting as other countries face,” he said.
Mr Watt continued: “There are a number of factors. Longevity – we are all living longer, which is good news and this is increasing the cost.
“Against that there are a number of changes, such as the reduction in the number of public servants.”
The secretary general added that “policy changes” could be made “in future” to bring down the pension bill. Public sector pensions currently cost the state around €3bn-a-year.
By Shane Phelan, Public Affairs Editor