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Higher taxes and higher PRSI contributions will be needed to fund pensions - ESRI

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Photo: Stock image

Photo: Stock image

Photo: Stock image

Higher taxes and higher PRSI contributions will be needed to fund pensions, according to a leading think-tank.

According to the Economic Social and Research Institute (ESRI), it is likely the pension age will be increased as well as PRSI contributions.

International research shows if nothing is done in relation to pensions now, the State pension age will have to increase by five years in 2030.

“We’re going to have to have more taxes and PRSI levied on the working age population if we’re going to avoid not having enough to fund pensions,” Dr Claire Keane told the Oireachtas Committee for Social Protection.

She said there are three options currently available on pensions - changing the pension age, changing taxes or changing the rate of pensions per week.

Dr Keane said it is likely the pension age will be increased as well and PRSI contributions will be increased also.

“The international research would say that by 2030, if we do nothing else, we’d have to increase the pension age by five full years, which is huge.”

The ESRI raised concerns increasing the pension age will not have an impact on prolonging the working age as people can instead claim social welfare like Jobseeker’s Benefit.

“If you are to raise the retirement age, you are to raise it in practise as well as just raising the age which people can claim the State pension,” said researcher Dr Barra Roantree.

“If you allow people to claim another benefit that is, in effect, the State pension or slightly lower rate of in the form of Jobseeker’s Allowance and that, then you’re not going to see the increases in employment later in life.”

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Women currently receive pensions which are around 35pc lower than retired men and Dr Keane said that this is due to lower participation rates over their lifetimes and more women working part-time than men.

She said some families cannot afford childcare and that “a lot of people” do not qualify for Government childcare subsidies.

“Realistically, unless we tackle that issue of lower female participation and higher likelihood of women working part-time than men, it’s going to continue on to the future,” she said.

Dr Keane said that auto enrolment pensions will also not be a great help to bridge the gap as women are “less likely to be working and when they are working, they are more likely to be on incomes under the threshold for auto enrolment”.




 


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