As the Irish Examiner reports, the proposal, contained in a report on the country’s ageing population launched by Finance Minister Paschal Donohoe, could see workers unable to get a State pension until they are in their 70s.
The model contained in the report is based on the State pension age (SPA) being increased to 67 this year, and then 68 in 2028. After that for every year of an increase in life expectancy, the SPA would rise by nine months.
The report predicts men’s life expectancy to rise from 81 to 87 by 2070, and from 85 to over 90 for women.
The Department of Finance says the proposal could “significantly reduce the cost burden” on taxpayers. It says slower revenue growth and rising expenditure will put significant pressure on the public finances in the future.
“Significant structural reforms are, therefore, absolutely necessary to meet the fiscal costs associated with population ageing,” the report states, adding that a failure to reform it will see the debt ratio move onto “an unsustainable path”.
According to the report, there are currently around four people of working age to support each person aged 65 and over, with this number expected to fall to just over two by 2050.
It adds that age-related expenditure is set to be €17 billion higher by 2050 and revenue increases will not be sufficient to fund all of these expenditure pressures.
It comes after the Pensions Commission recommended increasing the State pension age to 67 between 2028 and 2031, before gradually increasing it to 68 by 2039.
Mr Donohoe said the Government will have to come up with a solution that is “financially sustainable”, adding that “in any decision the Government makes there will be consequences to it.”
Taoiseach Micheál Martin said “full consideration” would be given to the proposals, adding that a “menu of options and decisions” have arisen from the report.
“Over the next 30 years, significant challenges will be facing us as a society in terms of pension sustainability because we’re ageing more as a society in terms of the proportion of young people to older people and people in the workforce,” he told reporters in Cork.
However, Laura Bambrick of the Irish Congress of Trade Unions, pointed out that life expectancy varies between income groups.
“Pegging the pension age to life expectancy would more negatively impact on low-income workers — those who, on average, enter employment at an earlier age than college-educated professionals in high-income groups who, on average, live longer and draw the State Pension for longer.”