Friday 24 November 2017

EU nations face difficulties over pensions issue

Colm Kelpie

Colm Kelpie

IT'S no secret. We're living longer but there are fewer people of working age to support us in our increasingly lengthy retirements.

Last year, for every pensioner in Europe there were four people of working age, on average.

Ireland, does better, with roughly five workers per retiree, according to Eurostat – Europe's version of the CSO.

But the direction is all one way.

The combined population of the 27 countries in the European Union was estimated at 503.7 million last year – up 6pc compared with 1992, according to the latest data from Eurostat.

Over the same 20 years the share of those aged 65 years or older in the population jumped from 14pc to 18pc.

Life expectancy across the EU is expected to shoot up by eight years for men, who will live to the ripe age of 84.6 by 2060, while women will live by an additional six-and-a-half years to 89.1.

It's one reason the European population is expected to surge, with Ireland topping the table with a projected 46pc increase by 2060.

The certainty that populations are getting bigger and living longer creates obvious knock-on pressures on states' social and health services.

Framework

In Ireland, the publication of the National Pensions Framework in March 2010 followed a major national debate on pensions.

The Government predicted that the ratio of workers to pensioners would decrease to two workers for every pensioner in 2060 from six workers in 2010.

Jerry Moriarty, chief executive of the Irish Association of Pension Funds, said a growing population puts increased pressure on the State's ability to fund old age.

"When you've got a much smaller working population, you have a much smaller tax base paying for a much higher pension base, and that's a concern," Mr Moriarty said.

"As a country we started planning for that by putting the National Pensions Reserve Fund in place, but obviously that has been pretty much all used to recapitalise the banks now.

"So having been ahead of everybody else in planning for it, we're now probably well behind."

The demands and costs of narrowing the ratio of those in retirement and those in work are obvious.

The Government has responded to the pensions issue by raising the retirement age – to 66 from next year, to 67 from 2021 and to 68 from 2028.

And Ireland isn't the only one. The UK pension age will jump from 65 to 68 by 2020, while Australia, the US and Germany are all set to increase their pension age to 67.

But maintaining pensions is just one of the myriad of difficulties posed by an ageing society that face governments across the world.

There are also implications for the public cost of rising health and elderly care, and how to keep more elderly people who want to work in jobs.

"You've huge issues about catering for older workers and long-term care. This is going to be a big issue," Mr Moriarty said.

Irish Independent

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