The Government's economic watchdog recommended all workers pay a moderate increase in PRSI to help fund the country's growing and aging population.
Census 2022 data published this week shows population growth of 8 per cent, with the over-70s age group seeing the biggest increases.
Irish Fiscal Advisory Council Chief Economist Dr Eddie Casey said current and future Governments need to put in multiple measures to adapt to Ireland’s aging population.
“This needs a broad ranging response, and it needs a credible response,” he said.
The IFAC says a 3.5% increase in PRSI rates over two years would help to avoid the need for more dramatic increases in the future.
Dr Casey argued against the Pension Commissioner’s suggestion to implement tax increases on a much more “gradual basis”.
“[With the Council’s plan], for an average worker on €35,000 a year, you’re looking at something closer to €1,200 per annum in taxes,” he said.
“But if you were to leave it and do it in line with what the pension commissioner recommended on a gradual basis, you’d have to increase [taxes] by 8% eventually, which would mean closer to €2,000 per annum in increases.”
“If we say we’re going to eventually increase taxes to fund it, it could mean we end up paying a lot more. We shift the burden to future taxpayers.”
Dr Casey said the Council’s recommendations ensures that the aging population has enough for pensions sooner.
“If you do it sooner, you have more workers in the system and you're spreading the burden across them rather than waiting for them to retire and then not being able to spread that burden anymore.”
