Saturday 19 October 2019

We have failed to prepare for our greying future and a million elderly will pay dearly

'The greatest, medium-term challenge to our social system is how to adequately provide for the needs of 1,000,000 extra people over 65 between 2016 and 2046'
'The greatest, medium-term challenge to our social system is how to adequately provide for the needs of 1,000,000 extra people over 65 between 2016 and 2046'
Ivan Yates

Ivan Yates

On this day next week the great and good of Irish officialdom will assemble in Dublin Castle. This latest incarnation of worthies proclaiming its self-importance with a suitably impressive title is called the National Economic Dialogue.

It's a two-day initial bash, which will hear opening lectures from Ministers Michael Noonan and Brendan Howlin about the budgetary framework for 2016, to be followed by sessions chaired by Professor Alan Barrett (ESRI) relating to economic and fiscal parameters. It's a proper bore-fest, at which dutiful media will try and make interesting. Instead of woolly, open-ended navel gazing, it should have a singular theme: How to cope with Ireland's million shades of grey over the coming decades.

The greatest, medium-term challenge to our social system is how to adequately provide for the needs of 1,000,000 extra people over 65 between 2016 and 2046. Last April, a report was published entitled 'Population and Labour Force Projections'; not as popular as the erotic romance novel from E L James - it has been largely ignored. Currently there are 600,000 people over 65. An extra 20,000 is added to this cohort yearly. Life expectancy will rise significantly towards 2060: Irish men can expect to live until 85; for women the age is 89. The '2015 Ageing Report' predicts our elderly population will rise from 3pc to 11pc.

The bottom line is that these extra dependency years will cost us 2pc of GDP to finance, attributed to public health care demands and extra pension payments. That translates as more crinklies in demographic terms AND they'll live longer. Those over 80 will move from less than 3pc of the population to more than 10pc. So, headlines like: '101-year-old woman spends 25 hours on hospital A&E trolley' may become more commonplace and harder to resolve.

As always, our politics doesn't cater for long-term planning, preferring quick fix strokes and voter inducements. We must get ahead of this curve if Ireland is to be a decent place in the world to grow old. Health budgets require incremental increases to meet these greying needs. People who are over 65 account for almost 50pc of the total Irish hospital bed days (243, 394). The trolley crisis is an immediate by-product of insufficient nursing home spaces.

Three out of every four delayed discharges relate to older people who don't require an acute bed, but can't live independently. The immediate pressure points are the 27,000 people in long-term residential care, and with up to 8,000 extra nursing home beds required by 2021, taxpayer costs will double.

At the same time, the Fair Deal scheme remains on the precipice of a funding crisis. On average, participants pay €250-€290 with weekly costs of €1,200. In 2011, the Minister for Social Care Kathleen Lynch announced an external review by Deloitte.

It has never been published.

Hiqa states 26 voluntary and public nursing homes (bed capacity of 1372) don't comply with national standards; only five have funded plans in place; leaving 21 facing potential closure. Some 80pc of pensioners' income and almost one-fifth of their house value are payable to the State. Fair Deal requires net Exchequer subsidy of €873m this year. Despite demands over the last five years, the number of private nursing homes has decreased by 4pc. The only logical conclusion is that progressively more than €300m will need to be earmarked for residential beds or expanded (more flexible) homecare packages.

One blindingly obvious requirement for one million extra oldies is the prospect of an income. Yet successive governments seem oblivious to taking action to provide social financial security for retirees. The consultation and analysis processes are interminable and include: the Pensions Green Paper 2007; the National Pension Framework 2010; OECD Pensions Review 2012; an interdepartmental working group to examine the new Universal Pension Savings Scheme 2015 - report/recommendations awaited. The result is always to kick the "grey" can beyond the next election. The pension age was raised to 68 in 2028. Most private sector 'defined benefit' schemes were replaced by 'defined contribution' operations. Some €2.5bn was taken from private pension pots, while 900,000 workers still have no provision beyond the State old age pension of €12,000 per year.

Over the next three decades, the ratio of workers to retirees will reduce from 5:1 to 2:1. The unavoidable solution is to adapt and implement Britain's National Employment Savings Trust (Nest) here, insisting employers must enrol all employees. Starting with the largest firms, but ultimately to include the self-employed, a blueprint of contributions of 4pc from employer, 4pc from employee and 2pc from the State could be agreed by all social partners and political parties.

Unless schemes are mandatory they won't work. A recent opinion poll conducted by the Irish Association of Pension Funds (IAPF) found 70pc of respondents favoured such a nationwide initiative.

The National Pension Reserve Fund (NPRF) is frozen, with contributions amassed of €7.2bn. The 2016 Budget should see a resumption of fresh funding of €300m per annum, growing to €400m by 2020. The Fiscal Advisory Council has repeatedly warned the Government that it has not provided sufficient budgetary allocations for our ageing population. Incentives to encourage savings for retirement through tax credits and USC reliefs are essential for low-paid workers. Other EU states will see their population decline by 10 million - ours is set to increase from 4.6 to 5.3 million.

We're the worst in the international leagues for auto-enrolment pension scheme prevalence. There is an urgent necessity to reach a social consensus on the future funding for all the multi-faceted costs of one million senior citizens. Otherwise, we face pinball politics of crisis management for future decades by failing to plan for the needs of our most vulnerable.

Irish Independent

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