'Pension time bomb' as State's bill up by €1bn every 5 years
Social Protection Minister Regina Doherty has warned of a pensions "time bomb" that has seen the State's bill spiralling by €1bn every five years due to our ageing population.
The sheer scale of the rising costs could jeopardise pledges by Fine Gael and Fianna Fail to increase the State pension by around €5-a-week each year over a full Government term.
One pensions expert, Jerry Moriarty, last night pointed to census figures that showed the number of over-65s has shot up by 20pc.
In relation to Budget hikes to pensions, the chief executive of the Irish Association of Pension Funds said there's a need to "take the politics out of it" and introduce a pre-determined basis for increases such as linking them to inflation.
"Deciding what's going to win votes is not the right way to go about it," he said.
The Government has said it hopes to exceed the rate of inflation in this year's Budget, while Fianna Fail is also pressing for continued increases.
Ms Doherty's officials have warned that pensions account for the single largest block of the department's expenditure at €7.2bn this year.
This expenditure is increasing by about €1bn every five years.
They also warned that last year's €5-a-week hike, along with other benefits increases, may increase expectations of similar measures in Budget 2018.
Constraints on exchequer finances and the impact of pension costs mean "it will be difficult to meet such expectations", the officials state.
They also pointed to one measure designed to mitigate against the rising pensions costs.
"Increasing pension age, to moderate the increase in pension duration, is a means by which pensions can be made sustainable in the context of increasing longevity," they said.
They point to changes in the law on when the State pension kicks in, which are due in the coming years.
The age will rise to 67 in 2021 and 68 in 2028, adding that, even when the age rises to this level, it will still be lower than the 1970s, where people had to be 70 to receive their pension.