IRELAND - The shortfall in Ireland’s Social Insurance Fund (SIF) - which forms the core of the country’s system of social insurance - is set to expand to €25.7bn by 2066, or 5.7% of GDP, according to the most recent official actuarial review.
The SIF finances long-term benefits such as pensions as well as short-term payments including maternity benefit, jobseeker’s benefit and carer’s.
The 2010 Actuarial Review of the Social Insurance Fund (SIF) sets out the position of the fund as at the end of December 2010 and gives projections from 2011 to 2066.
The fund currently has a significant shortfall of expenditure over income, at a provisional €1.5bn for 2011 on expenditure of €9bn, but income of just €7.5bn, according to the review.
This deficit is due to double to €3bn by 2019 in the absence of action to tackle it, and will have increased to €25.7bn by 2066, it found.
Assuming no action is taken, the sum of all the annual deficits up to 2066 is projected to be €323.7bn, expressed in current terms.
Joan Burton, minister for social protection, said the review was timely and insightful.
“One of my key priorities as minister for social protection is to balance the books, in particular by starting to put the Social Insurance Fund on a sustainable footing,” she said.
“The significant shortfall in the [fund], which is being met by the Exchequer, and the prospect of acceleration of this deficit in the future, represents a daunting challenge that must be addressed.”
The review provided a platform for understanding the dynamics of funding for social insurance, as well as basis for exploring options for the future sustainability of the fund, she said.
But she cautioned that long-term projections were difficult to predict, so individual figures should be treated carefully.
“It is, however, the trends that emerge over time that provide a basis for assessing the health of the fund,” she said.
There was little doubt that the longer-term trends were cause for serious concern, she said.
The review found that the deficit would worsen despite recent changes to social insurance funded schemes - including increases in the state pension age and the tighter eligibility criteria for the state pension contributory.
In the medium to long term, spending related to pensions will account for an increasing proportion of the fund’s expenditure, the review found.
This will rise to 85% in 2066 from 57% in 2011.
The over 65s population is projected to rise to 15% of the total population in 2020 and to 24% in 2060, from 11% in 2010.