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The very scary opinion poll about pensions

There was a remarkable opinion poll in the Sunday Independent yesterday, and for once, it had nothing at all to do with party political support levels. Instead, the public were asked for their views on pensions – and the age at which pensions should be paid. The answers were stark:

Not alone do 85% of Irish people oppose any increase in the current pension age of 66 – almost half of the public favour reducing the age at which the state pension is paid to 65.  It is difficult to imagine a starker example of the problems with democracy than this – because, as we shall see, the simple fact of the matter is that 85% of the voters have an opinion which is at odds with basic reality.

Here at Gript, we have been one of the only outlets in Ireland to consistently highlight the problem of Ireland’s demographic change. Put simply: We are having fewer and fewer babies, and the people who are already born are getting older by the day. In time, this will mean that we have many more pensioners, relative to the working population, than we do today. Here are the official figures on this, from the Department of Finance:

The composition of Ireland’s population is set to change significantly over the coming decades. The old-age dependency ratio in Ireland – the number of retirees as a fraction of the number of workers – is set to nearly double over the next 30 years, from 24 per cent at present to 47 per cent by the middle of this century (53 per cent by 2070). To put it another way, there are currently around 4 persons of working age to support each person aged 65 and over; by 2050, the equivalent figure will be just over 2.

2050 is not as far away as it seems. To put that in perspective, somebody who will turn 65 – current retirement age – in 2050 will turn 37 years old this year. These are people (I myself will turn 38 this year) in the prime of their working lives. The present situation is that unless we start breeding at an incredible rate from today, then when we hit retirement, there will be almost no way for the state to pay our pensions.

State spending on pensions is already increasing dramatically: Between 2008 and 2017, spending on pensions increased almost by half. There are several things driving this, but the biggest one is simply that people are living longer. When the average life expectancy was 73, the average person spent 8 years receiving a state pension. Now, the average life expectancy is 83 – meaning the average person spends 18 years in receipt of a pension. It is a very good thing that better healthcare means that people are living longer, but the financial consequence of that is that more spending on health ultimately means more spending on pensions.

There are really only three ways to stop the pension system ultimately bankrupting the country. Either we a) raise the pension age progressively to account for better healthcare and longer lives, b) commit to a policy of mass immigration to increase the population of working people and make up for the babies Irish people are not having or c) we dramatically reduce the amount paid out in pensions by cutting the payments themselves. It is almost too late now, for the fourth option, which is to start having many more babies.

Government policy at the moment is a combination of a) and b). But, at the last election, a Government proposal to increase the pension age was met with a rebellion by voters which almost delivered a Sinn Fein Government.

Further, mass immigration, while it might be favoured by many, is not especially popular either. And of course, nobody who ever wanted to keep their seats would propose a cut in the pension rate.

Raising the pension age, for all that it is unpopular, is the most logical of these policies. Because people are living longer, that also means that they are more healthy. A 65 year old person today is vastly healthier and fitter, on average, than a 65 year old person in 1986. Asking people to work to 70 or 72 instead of 65 might well be unpopular, but it’s also the quickest and simplest way to defer the crisis that will come – as a matter of certainty – if nothing changes.

The problem here is that Irish politicians as a collective have been uniformly terrible at explaining the looming problem to the voters, and further that there will always be those who – for short term advantage – will pretend that there is no problem at all. And so, we are in a position where only 14% of the electorate will countenance any rise in the pension age at all. Doing the right thing in the long term is, then, a surefire way to lose the next election in the short term.

Of course, it is perfectly legitimate to oppose an increase in the pension age. Many of my readers will oppose it fiercely. But those voters have a duty, too: The problem is real, and undeniable. As voters, if we do not like one solution, we can vote for parties who oppose that solution. But it is incumbent on all of us to ask, openly and relentlessly, for those parties to provide a serious alternative solution, and to spell it out.

At present, Ireland is on course for a disastrous pensions reckoning. There is time to fix it, but poll numbers like these demonstrate that most people don’t even understand the problem.

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