Sunday 17 November 2019

Irish pension bill is lowest in Europe, but set to rise

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Donal O'Donovan

Donal O'Donovan

The Government here spends less on pensions than any other nation in Europe, including Turkey.

That is unlikely to change in the coming decade, because even though our proportion of older people is rising, the pace is less rapid than in most of Europe.

Figures prepared by Eurostat, the EU's official statistics agency, show average spending on pensions across 28 members of the Union was equal to 13.2pc of the size of the economy.

In Ireland, pension spending works out at 7.3pc of gross domestic product (GDP).

As a share of GDP Greece (17.5pc) spends the most on pensions.

Looking at a broader measure of expenditure on care for the elderly - covering care allowance, accommodation, and assistance in carrying out daily tasks - also shows Ireland is also well below the European average - at 12th out 28 in terms of the scale of spending.

Across the EU28, elderly care, excluding pensions, accounted for 0.5pc of GDP in 2012. Non- EU member Sweden spends most on care for the elderly - a reflection of the high share of older people in its population but also of relatively high state spending generally.

Ireland's lower spend on the elderly reflects the relatively small number of over 65s here.

In all countries the cost of maintaining pensions and elderly care is increasing.

Ireland is among the least affected, but people here are living longer and that trend is intensified by the collapse in the birth rate in Ireland, down by a third since the "Pope's Children" baby boom of the late 1970s, but on average we are younger than our European peers and will remain so for decades.

Forecasts from the European statistics agency are that the median age for Irish people will be 41.4 years old by 2060. The median is the age where half the population is above and half is below a particular age.

By comparison, the median age in Germany was 44.2 in 2010 and in Italy it was 43.2. By 2060 both countries, along with a substantial cohort of continental European nations will have median ages in excess of 50 - meaning most people living there are above that age.

In Europe, no country is projected to have a lower median age in 2060 than in 2010.

That greying population is unprecedented in any human population in history, according to EU statisticians.

In Europe by 2060 grandparents will outnumber grandchildren.

It will radically alter the public finances in all states, across Europe, as the cost of supporting large cohorts of older citizens falls on shrinking numbers of younger workers.

The trend is not restricted to wealthier nations.

After 2040, Latvia and Romania are projected to have the highest median ages.

In contrast, Sweden and other west European nations are tipped for population rebounds, as immigration is tipped as one potential catalyst for rejuvenation.

Irish Independent

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