For years, Ireland has sold itself as a young, vibrant place – an ideal location for wandering multinational businesses looking for an English-speaking workforce.
Yet, according to the population estimates published by the Central Statistics Office (CSO) this week, the State’s age profile has been shifting – and faster than expected.
For the first time since 2014, the number of people living in the State under the age of 14 has fallen below the one million mark. Now standing at 992,400, this age group has seen its share of the population fall from 20 per cent in 2020 to 18 per cent in 2026 – a drop of 21,300.
At the same time, those aged over 65 now account for a larger share.
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An additional 165,000 are now in this category – a figure that has grown from 14.4 per cent in 2020 – to 16.1 per cent in 2026.
“It’s a bit like climate change where we talked about it being in the future,” says Alan Barrett, director of the Economic and Social Research Institute, “and all of a sudden the future is beginning to catch up on us.
“The increase in the number of older people was well flagged, but fertility rates in Ireland have fallen more quickly than we anticipated. Population ageing is now a reality”.
Barrett is referring to figures published at the end of last year.
The CSO recorded Ireland’s fertility rate – the average number of children a woman will have in her lifetime – as being 1.5 in 2025. Ten years earlier that figure was much higher, at 1.9.
He says there are several immediate implications.
[ Population rises to 5.5m but the number of births continues to declineOpens in new window ]
“There is obviously the pension issue, but healthcare comes up as another one,” he says.
“It’s not just that there are more people over the age of 65 – but that there are more people over the age of 80. Issues around long term care come into focus as well”.
Barrett says thinking around how Ireland would eventually deal with the financial and social impacts of an ageing population have been around since the end of the last century.
He points to the “much maligned Charlie McCreevy” – the former Fianna Fáil minister for finance who served in this office from 1997 to 2004 – as having the right idea when he established the ill-fated National Pensions Reserve Fund in 2001. This was designed to store away interest-earning money so that a burgeoning future pensions bill could be met.
It was eventually raided as part of the national bailout programme when the State teetered on the edge of bankruptcy in 2010-11 following the economic crash and banking collapse.
Barrett says that if 1 per cent of national gross domestic product had been put into the fund each year as planned, it would be significantly larger now than the two sovereign wealth funds recently established by the Government.
“You think back as well to Mary Hanafin, who had pre-announced the delaying of the retirement age to 68,” he says, referring to the then minister for social affairs.
Hanafin’s plan, announced in 2010, envisaged the qualification ages for the State pension increasing from 65 to 68 by the year 2028.
“That was another policy that would have curtailed the expenses related to the State pension, but we junked that as well”.
Jim Stewart, adjunct professor in finance at Trinity College Dublin, has grappled with the looming pensions issue for a long time.
He believes the faster than anticipated fall in Ireland’s fertility rate might bring forward the State’s demographic profile by “five or 10 years” from where it was previously assumed.
But the fundamental issue will not have changed.
“People who are currently in their 30s and 40s will have to consider what their retirement plans are going to be,” he says.
Echoing Barrett, Stewart sees generations of people coming through who simply won’t have the means to retire at 65, and will have to continue working.
“It’s an issue that will increasingly be faced by retirees who don’t have the money to retire on,” he says.
“There is no doubt that longer working lives will have to happen. You can make it voluntary – you can’t have someone who has been working on a building site for 50 years who is physically knackered continuing to do that – so it will involve changes in the workplace and will have to be facilitated.
Bringing up a child in Ireland is very, very tough. You have child-minding fees along with a work ethos that is not friendly towards working mothers at all, particularly within the US multinational sector
— Prof Jim Stewart
“It creates problems for employers who have been waiting for someone to retire who they then can’t get rid of.”
Stewart identifies a group of workers who, by the time retirement rolls around, will either not have paid off their mortgage or who will still be renting.
This, he says, combined with defined contribution pensions that are linked to stock market performance, creates potentially precarious golden years.
He is “sceptical” of the ability of auto-enrolment to deliver the savings needed.
“A ‘pay as you go’ system from the point of view of a pensioner is much less risky,” he says.
“The State has other resources to pay the pensions. With funded pensions they have to be collected, you then have to manage the funds; they are more expensive to administer.
“With funded pensions you are basically saying past returns are indicators of future returns. The stock markets are a risky return – yes they have performed quite well over the past 10 years but there have been periods when they have not. It’s not sure-fire at all.”
[ Northern Ireland’s ageing population: Why pensioners will soon outnumber childrenOpens in new window ]
Beyond permitting people to work past the age of 65, there are other possible ways of balancing out an ageing population.
In Singapore, so alarmed are the authorities about the country’s falling birth rate – they recently unveiled a package of measures worth more than $55,000 (€47,000) per child to encourage people to have more children.
The city-state registered a fertility rate of 0.87 children per woman last year, spurring its government into action.
Stewart says it will take more than money to make a difference to Ireland’s falling birth rate.
“There is no doubt that bringing up a child in Ireland is very, very tough,” he says. “You have child-minding fees along with a work ethos that is not friendly towards working mothers at all, particularly within the US multinational sector.
“It’ll need much more family friendly policies – not just a stack of cash. You need to make it easier for people to have children.”
And then there is inward migration.
It has been suggested that Ireland will have to rely on a large number of foreign workers in order to support the growing needs of the older population in the years ahead.
Nat O’Connor, an assistant professor of social policy at University College Dublin, says: “If we stopped migration today, the ageing population story would hit us like a tonne of bricks.”
O’Connor says key workers in healthcare are predominantly non-EU workers coming from south Asia and they play a crucial role in maintaining vital services.
[ Ireland’s ageing population ‘standstill costs’ reach extra €3bn a yearOpens in new window ]
“The majority of migrant workers pay a bunch of taxes, don’t use a lot of services and then leave again,” he says.
However, O’Connor points out that many of those who stay here for the long term are renters too – and in their retirement years will still be renting their homes. This will put an additional burden on the State by means of housing assistance.
“That is coming down the track,” he says.
Another area already being affected by the falling birth rate is schooling and education.
The number of children attending primary school is projected to drop by 100,000, or almost a fifth, over the next decade, according to the Department of Education’s latest estimates.
O’Connor believes many school mergers are being driven by the need to consolidate and remain viable.
“There have been some cases where girls and boys schools have been put together – that is part of that consolidation,” he says. “It is not just about the modernity of having mixed sex schools”.
In light of all this, O’Connor is scathing in his criticism of current Government taxation and spending policies.
“It’s incredibly foolish what the Government is doing at the moment with the public finances,” he says. “It is only saving a tiny amount. The whole thing about tax cuts – looking constantly for more cuts – is totally unsustainable.
“They are cutting the taxes of people in their 40s and 50s who are at the height of their earning power, who will then be retiring and actually voting to raise taxes in 20 years’ time.
“That will be a political disaster.”
