C: Pxfuel.com

Nobody – including Sinn Féin – has a solution to our pensions time bomb

Fine Gael’s election campaign seems to have been derailed in part by the understandable anger felt by voters at the mess the government has made of the pensions issue.

The issue has arisen because private sector workers retire at 65 but since 2014 they have not been entitled to access the State pension until 66 – and this will rise to 67 years from January 2021, and again to 68 in 2028.

That means that people retiring now at 65 won’t get the State pension for a full year – so they are being forced to sign on the dole, applying for the Jobseekers’ Benefit. To do that, 65-year old retirees are obliged to say they are available for work and genuinely seeking work.

This is clearly absurd. More than that, most people who have worked hard, paid taxes and are required to retire at 65 absolutely resent being told that they must now play this absurdly dishonest game to get what they believe they are entitled to.

But they are also being hit where it hurts most, in the pocket, with the maximum available under Jobseekers’ Benefit accruing to a significant €2,350 less than the State pension in one year.

This was legislated for by the Fine Gael-Labour coalition back in 2011, but with the customary short-sightedness of politicians they didn’t forsee the problems that would arise.

Sinn Féin is enjoying a poll boost for saying, with the happy insouciance of a party which knows the value of everything and the cost of nothing, that they will simply roll back the legislation and ensure that people can claim the pension at 65.

But there’s a major problem with pensions that everyone is ignoring, and that no-one – including Sinn Féin – has any real solution too.

The truth is that Ireland, like every other European country, is hurtling towards a pensions disaster of our own making, and almost no-one is talking about it. In fact, all of the major changes we’re busy making to ‘progressive’ Ireland is probably going to make everything a lot worse.

Last August, the National Risk Assessment flagged that Ireland’s ageing population was amongst the “most serious” risks we face – and that it is going to put significant strain on our ability to provide healthcare and pension amongst other things.

The report warned that 1 in 6 of Irish people will be aged over 65 by 2030, and that our birth rate has been falling since 2009.

“The task of financing increasing pension spending will fall to a diminishing share of the population as projections indicate the ratio of people of working age to every person aged over State pension age will reduce from its current rate of 4.9:1 to 2.3:1 over the next 40 years,” the report states. So in 40 years we’ll only have half the number of working people we have now to pay for pensions – and everything else.

The fertility rate in Ireland has now fallen to 1.8, but across Europe most countries are now below that level. In Portugal its 1.31 babies per woman, and similar rates have emerged in southern European countries – Spain with 1.33 and Italy at just 1.35. In Asia, the crisis is well established, with Japan, South Korea and many other countries facing a serious population implosion.

Fertility rates are also falling fast in Africa. While many western countries rely on immigration to fill the gap in labour, pension and other requirements, that most likely won’t continue.

We’re just not having enough babies. That matters because economic growth relies on population growth. We need people to buy the goods and services we’re selling to have an economy, to allow us to have jobs and career, to pay for pensions, and to care for us when we are older, but we won’t have that if we don’t have enough children.

Something else in the mix.  People are living longer, and requiring more healthcare – so we’ll have this unsustainable future where we have more and more retired people and fewer and fewer people of working age to sustain pensions and everything else. This is called the demographic time bomb, because it’s happening right across the world and everyone is ignoring it but it’s a huge ticking problem that’s going to go off very soon.

This has mostly been ignored by the media or examined with the typical myopia of the liberal left which can only consider solutions which fit it’s own worldview. But they are ignoring at our peril the blindingly obvious – if we don’t have children we won’t have anyone to pay our pensions.

That’s what’s at the root of the pensions issue which has been thrown into stark relief in this election. The State can’t afford to start paying pensions now at 65 years. At what age can we expect to retire at by 2040 –  70, perhaps 75? Who knows?

One of the most alarming things about the global fertility collapse is that other countries are finding it almost impossible to reverse with traditional incentives such as childcare supports or allowances.

One country bucking this trend is Hungary. They found that simply offering benefits to people for having children didn’t really increase the birth rate, but when they incentivised marriage along with having children that changed. So women didn’t want to have a baby on their own, but when marriage rates went up, the number of babies went up. That makes sense.

What we need to do to help people have children is to incentivise marriage and encourage positivity towards children and families – but in Ireland we’ve just legalised abortion and we’re about to make divorce even easier. Typical Irish, late to the party, and last to learn from everyone else’s mistakes.

So here’s an inescapable truth: we are not going to have enough money to pay pensions, and that means the retirement age will have to continue to rise but that won’t be enough. We need a deadly serious conversation on the pensions timebomb that’s ticking fast. And we need to address the elephant in the room – and help people to have families – before we too pass the point of no return.

But to do that we need to elect politicians who have pro-family and pro-life policies, not the usual suspects who are blinded by both ideology and self-interest. In two weeks, you’ll have a chance to make that choice. Choose wisely.

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