IRELAND’S PENSION PROBLEM has always seemed like one for the far flung future (try saying that three times fast).

Always a problem for another day.

Well, sorry to burst your bubble – the pensions crisis is here. It’s just happening in slow motion.

One of the first strong indicators has just been published by the good folks at the Central Statistics Office (CSO).

Their ‘Population and Migration’ stats came out a few weeks ago. They got plenty of pick up in the media, but the attention was mostly on things like overall population growth. Or the number of young people heading to Australia.

Older population skyrockets

But there was actually another crucial nugget in the stats which hasn’t been discussed – the surge in the old age population. And the collapse in births.

The number of people aged 65 and over rose from just over 700,000 in 2019, to 861,000 as of April 2025 – a 23% increase in a few short years.

Now, the caveat here is obviously that the general population rose too. So you’d expect the number of older people to increase, right?

Yes, but not by so much.

Ireland’s population increased from 4.92 million in 2019 to 5.46 million in 2025 – a rise of about 11%.

So the old age population is growing about twice as fast as normal.

What’s more, while the number of elderly is rising, the youth population is falling.

There has been a shocking decline in the number of newborns. To see the full impact, the CSO went a bit further back. It noted that, in 2010, there were 75,000 children aged 1 year or below.

That plunged to 55,000 in 2025 – a fall of 26% in the space of just 15 years.

“A downward trend in births since 2010 has driven declines in those aged between 0-4 years since 2012,” it said. “This also leads to a decline in those aged between 5-9 years from 2017 onwards.”

Ticking pensions timebomb

What does all of this mean?

It means that Ireland is ageing – rapidly.

The number of elderly people is surging, while births are falling off a cliff. And all indicators point to both trends continuing.

This will be economically disastrous in a variety of ways. But for now, we’ll focus on what this means for the pension system.

Basically, it’s a harbinger of the so-called ‘pensions timebomb’.

Most readers will have heard of this before. It refers to when the state’s pension system is set to be pushed to the brink of collapse.

There are currently about four workers for every retiree. By 2050, this will drop to two workers per retiree. And, as life expectancy rises, these retirees will be drawing pension payments for longer.

Ireland’s pension system operates on a “pay-as-you-go” basis, relying on current workers’ contributions to fund retirees’ benefits.

That’s ok when you have lots more workers. As is the case now – the ratio currently stands at about 4 workers for every 1 pensioner.

But that’s set to drop to a ratio of about 2:1 in the coming years. Which means that workers will be under far more pressure to try to fund pension payments.

We can already see some of the impacts of this. The most obvious is that workers are paying increased rates of PRSI.

But hey, this is all old news to many readers, who’ve likely heard plenty of ‘timebomb’ warnings over the years.

However, the CSO stats give an indication that this issue has changed. Before, it was theoretical – something warned about by economists.

It’s become practical – we have evidence the population is ageing quickly, right now.

We can also see how rapidly this will accelerate.

Because, guess which group saw the second biggest population rise between 2019 and 2025? Those aged 45 – 64.

Currently, the only thing slowing down how fast Ireland is ‘greying’ is immigration.

Of those who moved to Ireland in the 12 months to April 2025, less than 10% were older than 45. Immigrants are overwhelmingly younger workers.

But even with extremely high levels of young people moving here, the population is still ageing quickly.

Immigration alone won’t solve Ireland’s underlying problem – the pension system relies on a large pool of new ‘workers’.

With the 26% fall in births in the space of 15 years, we can see that this pool is rapidly drying up.

Pensioners poverty risk

It’s estimated about a third of pensioners rely on the state for virtually their entire income. If the pension system stops working, these people face living in poverty. And this group is rapidly getting bigger.

The government has made some moves to address long term financial planning. The most notable one is the introduction of auto-enrolment pensions, which are set to come into force next year.

But as the government has repeatedly insisted, auto-enrolment is only meant as a supplement to the state pension.

That still leaves the fundamental question of: ‘How do fewer workers pay for more retirees?’ largely unresolved.

The projected increases in PRSI will help plug the funding gap. But it can’t do it alone. It’s estimated a 0.1% increase in PRSI raises about €240 million per year. The government plans to raise PRSI by 0.7% by 2028.

Scaled linearly, that’d be about an extra €1.7 billion per year. This doesn’t take population shifts into account, but it’ll be around this amount, so let’s just say €1.7 billion to keep it simple.

The fund behind Ireland’s pension system is expected to start recording deficits of €3.5 billion per year – twice as much as the extra amount raised from PRSI – as early as 2040.

The deficit will then surge as the population ages further, rising to tens of billions per year.

It’s also worth briefly considering how the PRSI increases are probably shooting ourselves in the foot long term.

Financial pressures are a key factor in lower fertility rates. If we need younger workers to have more children, are PRSI hikes really the best idea?

Well, the government has committed to not raising the pension age, despite international analysts saying it’s needed. So perhaps PRSI increases are the best band-aid.

In short – we can clearly see now that the ‘greying’ of Ireland is already rapidly happening before our eyes. The scale is being somewhat masked by high levels of immigration and a strong economy.

But, long term, these won’t be enough to balance things out. Especially as the ageing of the population accelerates.

The government has tinkered around the edges of the state pension system for long enough. It’s time to grasp the nettle and address the root of the problem, before it’s too late.