Sir, – Ethel Buckley, Siptu deputy general secretary, again mispresents the analysis of the Irish Fiscal Advisory Council and the choices Ireland faces as the population ages (“Retaining pension age is the right decision”, Letters, July 5th). It is misleading to say that “raising the qualifying age generates] . . . only a small savings in future pension expenditure”. The rise in pensions costs is being driven both by rising life expectancy and by more people reaching age 66 as Ireland’s baby boomers reach retirement.
The increase in pensions spending over the coming decades will be very large: the Irish Fiscal Advisory Council estimates that spending would rise under the current system from around 8 per cent of national income today to over 12 per cent by 2050.
The Irish Fiscal Advisory Council’s analysis shows that raising the pension age in line with rising life expectancy would reduce the increase in the share of national income of State pension spending by 40 per cent to 50 per cent. This saving would be significant, at 2 per cent of national income per year by 2050, equivalent to around ¤4.5 billion today.
The Pensions Commission concluded that it would be a “strategic risk not to take steps to shore up the fiscal sustainability of the State Pension”.
The Pensions Commission’s preferred option combined raising the retirement age and increasing PRSI contributions. Under this option, PRSI contributions by employers and employees would rise substantially: the increase in tax on a worker earning a typical wage of ¤35,000 would be at least ¤1,000 a year in today’s terms.
Maintaining the pension age at 66 would further add to these tax increases. And, there may be additional pressures in the future to raise taxes on households from the cost of climate change transition and lower corporation tax receipts.
People can take different views about how to balance the retirement age and the burden of taxes on future generations. However, this should be based on a realistic assessment of the costs of different options and a full view of all the challenges Ireland will face in the decades ahead. – Yours, etc,
SEBASTIAN BARNES,
Chairperson,
Irish Fiscal
Advisory Council,
Dublin 2.