In a lecture delivered in early December, former taoiseach Leo Varadkar said he was not certain about many things in life, but he was pretty sure that the Irish population would grow to six million by 2040 or so.
In addition to rising numbers living in the country, he said there would also be lots of people over the ages of 65 and 85.
Ireland today has a relatively favourable demographic profile. The median age of 39 is the second youngest in the EU and the country has the highest share of the population aged 19 years or under and the second lowest share of the population aged 65 and over.
However, over recent times there have been various warnings from senior politicians and officials this is set to change significantly over coming decades.
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In September, the secretary general of the Department of Health, Robert Watt, told the Dublin Economics Workshop demographic change in Ireland was accelerating. He said between 2016 and 2023, the population increased by an additional 542,000 people, or some 11.4 per cent.
He said this masked a 36 per cent growth in the population aged between 70 and 79.
Department of Health projections forecast the number of people aged 65 years is set to reach more than one million by 2030 and could reach between 1.88 million and 1.94 million by 2057. As the population ages, it will have significant implications for the public finances.
A report published by the Department of Finance in June said pensions, healthcare and the cost of long-term care were all set to increase substantially in the decades ahead. In the absence of policy change, it said, an ageing population was projected to involve additional annual expenditure of more than €16 billion in 2022 prices.
Launching the report, then minister for finance Michael McGrath said as the population aged, the ratio of those working to those over 65 would change significantly.
“Today this ratio stands at around four but by 2050 it will fall to just two. Ireland’s pay-as-you-go pension system means that the burden of financing an ageing population will fall on the next generation,” he said.
“In overall terms, the impact of an ageing population on the public finances will be significant. Total age-related expenditure will increase by six percentage points of national income over the next three decades, the largest increase in the EU.”
The Department of Finance said an ageing population would also dampen economic growth as the labour supply expanded at a slower pace and growth in output would be increasingly dependent on productivity gains.
“Government revenues are linked to growth and this will be one of the channels through which an ageing population will impact on the public finances.”
The Department of Finance said in the summer that while a range of reforms had been introduced, “on their own these will not be sufficient to offset the fiscal pressures associated with an ageing population”.
[ Ireland’s population ageing faster than anywhere else in Europe as births fallOpens in new window ]
It said the Government had established the Future Ireland Fund to help offset some of these pressures. However, it was “clear that further reforms will be required including additional reforms to the pension, healthcare and long-term care systems, restraint in non-age related expenditure and/or tax increases”.
“Given the scale of the challenge, the response is likely to require some combination of all these policy options.”
The report said the optimal approach for reform included “a better alignment of the State pension age with life expectancy – the current arrangements were designed at a time when life expectancy was much lower than it is today”.
However, raising the pension age has proved to be extremely controversial politically.
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