Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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326. To ask the Minister for Employment Affairs and Social Protection the estimated total costs of expenditure on State pensions based on increased life expectancies in the decades ahead; and if he will make a statement on the matter. [52639/25]

Dara Calleary (Mayo, Fianna Fail)
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My Department is acutely aware of the potential impacts of the projected demographic changes on social protection supports, particularly in relation to the funding of State pensions.

My Department assesses all factors relating to the State pension system and its sustainability through Actuarial Reviews of the Social Insurance Fund - from which the State pension is paid.  An Actuarial Review must be conducted every five years.  The last Actuarial Review was published in March 2023.  The purpose of the review is to determine the extent to which the Fund may be expected, in the longer term, to meet the demands in respect of payment of all benefits, including State pension payments.  The review takes account of the adequacy or otherwise of contributions to support such benefits and payments, as well as other matters relevant to the current and future financial condition of the Fund.

A consistent finding of the Actuarial Reviews is that the Fund will experience significant long term sustainability challenges.  The Fund is projected to register annual surpluses up to the mid-2030s with an accumulated surplus of over €21 billion by 2035, at which time it would return to an initial annual small deficit, increasing markedly thereafter.

The Actuarial Review found that, in the absence of any action to tackle the shortfalls, the excess of expenditure over income of the Fund will increase significantly over the medium to long term with an accumulated deficit of €500 billion by 2076.  This is mainly driven by the changing demographics, particularly the ageing of our population and the decreasing pensioner support ratio (the ratio between the number of older people and the number of working age people).

The previous Government established the Pensions Commission in November 2020 to examine the sustainability of the State Pension system and the Social Insurance Fund in light of the projected demographic changes.  The Commission's Report, which was published in October 2021, took account of an assessment of various analyses of population, labour force and expenditure projections and set out recommendations to address the sustainability of the State pension system.

In order to address the future sustainability of the Social Insurance Fund, the then Government decided not to increase the State pension age but instead to implement a series of gradual and incremental increases in PRSI rates across all three contributors to the Social Insurance Fund - employees, employers and the self-employed.  These increases total 0.7 percentage points between 2024 and 2028, with further increases to be considered, based on the most up-to-date data available from the next Actuarial Review of the Fund.

I trust this clarifies the matter for the Deputy.