In light of the fact that Ireland has an ageing population and that there will be less workers to fund the State pension in the future, almost six in ten (58%) adults in Ireland believe the Government should take some form of action now to ensure the State pension can continue to be paid in the future. This is according to findings from a nationwide survey1 by Royal London Ireland, a leading provider of life insurance and pensions in Ireland, which are emerging just ahead of this Tuesday’s Budget.
Just how the Government should tackle this pension problem is the source of some debate amongst the general public:
- More than one in four (27%) believe the State pension should be means-tested to ensure it remains sustainable going forward.
- Over one in five (22%) believe the Government should substantially increase social insurance (PRSI) contributions for all workers. While three in ten (30%) of men say the Government should substantially increase social insurance contributions to ensure the State pension is sustainable going forward, just 13% of women feel the same.
- One in five (19%) believe the Government should increase the minimum State pension age by at least two years, from 66 to 68, with far more men (23%) than women (15%) feeling this way.
Royal London Ireland commissioned this survey to examine how sustainable the Irish public believes the State pension is in the long-term, and what actions, if any, the Government should take to ensure the pension can be paid to retirees into the future. According to the Tax Strategy Group, the Social Insurance Fund, which is the primary source of funding for the Irish State pension, will have an estimated shortfall of €2.3 billion in 2030, rising to €13 billion by 2050, and up to €21 billion by 20702.
Commenting on the survey findings, Mark Reilly, Pensions Proposition Lead at Royal London Ireland said:
“The long-term sustainability of the State’s pension system has been a concern for many years, due mainly to an increasingly ageing population and in turn, a significant fall in the number of people of working age funding the State pension system. In 1991, there were five working age people to one pensioner, and it is projected that this ratio will fall to 3.5 workers to one pensioner by 2031 and to 2.3 workers to one pensioner by 20513.
“Many people rely on the State pension when they retire. A recent report found that one-third of workers in the State had no pension cover in 2025 and mostly expect to rely on the State Pension in retirement4. While Auto-Enrolment or My Future Fund will certainly help to address Ireland’s pension coverage gap, it’s clear that a large portion of the population rely, or expect to rely, on the State pension in retirement. It’s perhaps not surprising therefore that our research has found that a substantial number of Irish adults want the Government to take action to ensure the sustainability of the State pension into the future.”
What the future could hold for the State pension
In an attempt to ensure the future sustainability of the State pension, there have been a number of changes to the State pension in recent years, including the increase in the qualifying age for the Irish State pension from 65 to 66 years5 and the deferred State pension6, which gives people the option to continue working until the age of 70 in return for a higher State pension.
Despite these changes, the Royal London Ireland survey found that almost two-thirds (65%) of adults in Ireland expect further changes in the pipeline for the State pension by the time they retire:
- Almost three in ten (28%) who have yet to retire believe that the State pension, which is currently payable from the age of 66, won’t be available until they’re in their 70s or older, with four in ten (41%) of those aged 18-24 holding this view, making this age category the most likely to believe this (see Table 2 in Appendix).
- Almost one in five (17%) believe the rate of weekly State pension paid will be greatly reduced by the time they retire.
- Around one in seven (14%) of non-retirees expect the State pension to be means-tested with that rising to one in five (20%) for those aged 35-44.
- Less than one in ten (7%) expect that the State pension will not exist at all when they retire, with that figure rising to 14% of 25-34 year olds.
Gender differences
The Royal London Ireland research revealed some notable gender differences around what the future might, and should hold, for the State pension:
- While almost half (49%) of women believe the Government should leave the State pension as it currently is, only three in ten (29%) men felt the same.
- Women are far more likely to expect the State pension to be available at a later age, with 35% of women who have yet to retire believing the pension won't be available until they are in their 70s or older, compared to 20% of men.
Mr Reilly added:
“While the State pension is an important part of the pension mix, it alone cannot provide an adequate retirement income for most people. The maximum State pension is currently €299.30 a week for those aged 66 to 79 – or €309.30 a week for those aged 80 or older7 and many people could struggle to live comfortably on this level of income.
“Increased longevity, rising living costs, and the recent trend of people hitting key milestones later in life has made it even more important for people to build up an adequate retirement income before they retire, in order to provide for financial security in later life. Having a private pension is essential to achieving this and it is important that this is not overlooked in the debate around the future sustainability, or lack thereof, of the State pension. The Government has as much of a responsibility to encourage and boost private pension coverage in Ireland as it does to copper-fasten the future of the State pension.
“People often underestimate how much money they will need in retirement and overestimate how long that money will need to last. This is why it’s so important to understand your financial position in the decades before retirement. Reviewing pension savings regularly, understanding your likely retirement income and seeking professional financial advice from a Financial Broker can make a significant difference to the choices available later in life.”
