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Ageing population to put strain on pensions and health system, Government warns

A high percentage of the working population is not saving enough or is not saving at all, says the National Risk Assessment.

Image: Shutterstock/mrmohock

THE COUNTRY’S AGEING population has been identified as a significant risk which will put pressure on areas such as education, healthcare, employment, housing, and pension provision, according to the Government’s latest report. 

The National Risk Assessment 2019, published today, identifies the challenges facing Ireland in the coming years with the context and pressures around several of them changing since 2018 – including the fallout from Brexit, potential instability in Northern Ireland, risks of climate change, and cyber-security risks.

Today’s publication warns that the number of people aged 65 and over is projected to increase from one in eight to one in six by 2030, and the number of people aged 85 and over is projected to almost double. 

As things stand, life expectancy is 83.6 years for women and 79.9 years for men. Life expectancy for men is above the EU average, while for women it matches the average.

Meanwhile, Ireland’s birth rate has been falling every year since 2009, with 62,053 people born in 2017. Despite this, Ireland has one of the highest fertility rates in the EU.

‘Most serious’ 

“Planning for demographic changes in the population so resources and services can be directed where needed is difficult, and the uncertainties associated with Brexit will only accentuate this problem,” the report states. 

The risk assessment report identified challenges facing the health system and pensions as the “most serious”. 

“State pensions account for the single largest block of social welfare expenditure, and the Irish pension system faces multiple – very serious demographic, adequacy and sustainability challenges.

“The task of financing increasing pension spending will fall to a diminishing share of the population as projections indicate the ratio of people of working age to every person aged over State pension age will reduce from its current rate of 4.9:1 to 2.3:1 over the next 40 years,” the report states. 

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It is estimated that the number of persons at State pension age and older will more than double from 586,000 in 2015, to 1,402,000 by 2055.

This presents significant funding challenges with the Social Insurance Fund forecast to accumulate a potential deficit of up to €335bn. 

The assessment also highlighted the low level of private pension coverage. It estimates that only 35% of those employed in the private sector are covered by a supplementary pension. 

This suggests that a high percentage of the working population is not saving enough, or is not saving at all, for retirement, reflecting a significant risk both in terms of the funding and sustainability of pensions in Ireland.

The report also warns that the significant increase in of people in older age cohorts will create significant additional demand for a range of health and social care services, including nursing home care, homecare, and medicines.

The report estimated that within the next decade, the number of adults with chronic diseases will increase by around 40 per cent, with relatively more of the conditions affecting those in the older age groups.

Currently, about 60% of those aged over 50 report having at least one chronic condition.

About the author:

Adam Daly

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