Mr. Sebastian Barnes:

There is some scope to go further, but it is much less than it was historically. When we think about these things, we factor in some of the gains in participation, including migration and some of the other things that have been helpful in this regard. Even when we take all those things into consideration, though, they are dwarfed by life expectancy beyond the age of 65 increasing by about one year every six years. Our children will probably live five or six years longer than we will. I think of this happening like a tree growing. From year to year, there is not that great a difference. If we come back in ten years, however, it will be radically different. What people find harder to understand is that we have these large cohorts of individuals born in the 1970s and 1980s who are going to be retiring and that this will mean a 50% increase in the number of people reaching the age of 65.

We have these two pressures at the same time. They will lead to a huge increase in the future cost of pensions. There is a tension in the pay-as-you-go system we run whereby we get existing workers to pay for the current generation of retirees. We have had uneven population growth. This means we are now in a period when many people are working relative to the number of people retired. We are one of the youngest countries in Europe in this regard. This situation, though, is going to reverse. In response to the findings of the Commission on Taxation, the council suggested that perhaps we should be raising PRSI rates earlier to enable us to get tax revenues from this generation and save them to pay for pensions. This is a choice, of course, but otherwise we are basically leaving the bill to younger people. It will not be our grandchildren. Anyone under the age of 50 will be subject to these kinds of tax increases.