Raising the pension age would only have a 'minimal impact' on how sustainable pensions are into the future, an economist has said.
He says it's 'really frustrating' that a difficult debate over the future of pensions is being reduced down to that one issue.
A recent Government report on the state of Ireland’s state pension claimed that to keep the current ratio of working taxpayers to pensioners in 2051 as the country ages, we'd need 4 million extra migrants.
Really worrying report on the state of Ireland's state pension.
To keep the current ratio of working taxpayers to pensioners in 2051 as the country ages, we'd need 4 million (!) extra migrants.https://t.co/vL0MuIWGWX pic.twitter.com/oxAJzkOJDa— Paul O'Donoghue (@paulodonoghue93) January 19, 2021
It has led to a fresh debate about how sustainable our current pension system is, and whether ongoing increases to the pension age would help the situation into future.
However, Michael Taft - economist for SIPTU - told Newstalk Breakfast that increasing the pension age would only have a ‘marginal impact’.
He said: “The Fiscal Council and Department of Finance are warning now we are about to enter a period of economic drought, where growth rate will return to rates last in the 1950s. If that is maintained, the pension age will be the least of our problems because we won’t be able to fund public services.
“We need to promote economic growth going into the future. We need to increase social insurance contributions to European levels, because we’ve been blessed by the fact we’ve had much younger populations up until now.”
Mr Taft suggested “there’s no argument” for freezing the pension rate, and dismissed the estimate that four million additional migrants would be needed to support a sustainable system.
He argued: “All models in terms of assessing the pension age work on the basis that pensions will rise in line with wages - that is only fair. In fact, what we need to do is we need to peg the pension at the rate the Government has already committed to.
“Increased contributions alone are not going to fix it. The social insurance system is about inter-generation solidarity - today we pay PRSI contributions to fund the pensions of current pensioners. When we become pensioners ourselves, that will be funded by a younger generation.
“The math will add up once we get the right policies in place. They will be based on growth, employment and social insurance contributions."
