The long-term public saving vehicle will not be sufficient to cover in full future age-related costs, an analysis entitled ‘Future-proofing the Public Finances – the Next Steps’ published by Ireland’s Finance Minister on Wednesday reads.
The report, which focused on 10 points, found that Ireland has a relatively high public debt, which will increase in the coming years. Contributing factors include transition costs incurred by the imminent climate and digital transition and Ireland’s ageing population.
Costs related to an ageing population are estimated to total between €7-8 billion more in 2030 compared to 2020.
The estimates of the financial burden of Ireland’s ageing demographic after this date are even more dire. By 2070, ageing-related costs will account for 31.5% of the GNI, an increase of 10.1 percentage points on the 2019 levels.
Furthermore, this increased spending on healthcare, pensions, and long-term care will be met by a dwindling pool of working-age people as Ireland’s workforce ages.
Significantly, the report highlights the cost to the Irish state of maintaining the retirement age at 66, totalling the expense at a startling €50 billion by 2070.
The paper’s main takeaway revolves around creating a long-term savings fund.
“While the Irish demographic picture is currently favourable, developments in the coming decades will mean that we will be spending significantly more just to maintain the current level of service, all because of an ageing population”, Finance Minister McGrath said about the paper.
(Sophie O’Rourke | EURACTIV.com)
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