Gov Under Pressure To Tackle Pension Timebomb emara Articles Monday, January 05, 2015 John McCarthy The Government is facing growing pressure to tackle the “pension time bomb” as the accumulated deficit in the Social Insurance Fund increased to €10.3bn by the end of 2013. The deficit is expected to have grown by a further €0.7bn over last year despite signs of continuing economic recovery. The 2013 accounts of the Social Insurance Fund, show expenditure on all welfare payments exceeded revenue from PRSI contributions by more than €1.3bn. However, the Government is likely to derive some comfort from the fact the deficit has fallen from a figure of almost €2.1bn in 2012. Nevertheless, a growing, ageing population has created a “pension time bomb” which will continue to place a strain on the State’s finances, despite last week’s promise by Tánaiste and Social Protection Minister Joan Burton that the Government will maintain existing pension rates. Ms Burton said she has already ensured there had been no cuts to pensions despite enormous pressures on the social welfare budget. Her comments came as it emerged that officials in the Department of Public Expenditure and Reform have argued as part of a major expenditure review that cuts to the basic rates of the State pension must be considered in order to ensure the sustainability of the Social Insurance Fund. They warned that without any changes to existing pension rates, the State is facing annual subventions of €200m up to 2026 to fund pensions due to demographic changes. They estimated that a €1 cut to the basic rate for both contributory and non-contributory pensions would result in annual savings of €19.7m, meaning cuts of €8.50 per week would be needed to offset the impact of demographic changes. Population projections suggest the number of pensioners will increase from 570,000 in 2013 to 855,000 by 2026. Other considerations include raising the age of pension eligibility and restricting the availability of the free travel scheme and TV licence for pensioners or seeking increased PRSI contributions. The reduction in the size of the deficit in the Social Insurance Fund during 2013 is driven largely by increased PRSI contributions which rose by 7.8% to €7.6bn as the number of people returning to employment gathered pace, while there was a related 24% decrease in the amount paid out in Jobseeker’s Benefit — down more than €175m to €560.5m. Continuing economic growth during 2014 has led secretary general of the Department of Social Protection, Niamh O’Donoghue to predict last year’s deficit will see a further reduction to €0.7bn. However, expenditure on pensions, which accounts for more than 60% of the fund’s annual payouts, also rose in 2013 — up 3.4% to 5.5bn. irishexaminer
Posted on: Mon, 05 Jan 2015 18:02:25 +0000
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