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Freezing the state pension age at 66 indefinitely could cost the exchequer up to €50 billion over the coming decades, according to the Department of Finance, which believes the age must be

raised in line with longer life expectancy. In the absence of drastic reforms, Ireland’s ageing population will put the national finances on an “unsustainable trajectory”, the department has

told the Commission on Pensions. The government set up the commission last autumn after public opposition forced it to backtrack on plans to raise the pension age, over time, to 68. “The

most important reform involves better aligning the state pension age with increased life expectancy,” the department said. This would push retirement past the age of 70 based on a predicted

rise in life expectancy in the future. Unless cuts are made to the huge costs of an ageing population, including pensions and other factors such as health and long-term care, the national

debt could increase to more than 180 per cent of national income by 2070 — double present levels — according to the department’s calculations. Advertisement The calculations were based on

the expectation that workers would outnumber pensioners by just two to one by 2050 ALAMY The full impact could be even more severe because of a likely spike in borrowing costs triggered by a

national debt of this magnitude. The projected debt mountain could be limited to a more manageable 140 per cent of national income if the pension age were pegged to increases in life

expectancy, according to the department’s projections. “Structural changes are absolutely necessary to meet the fiscal costs associated with population ageing,” officials said. “Without

these it is possible that the debt ratio will move on to an unsustainable path.” Abandoning plans by the previous government to raise the pension age to 67 this year and to 68 in 2028 will

cost an estimated €50 billion over the next 50 years. This accounts for almost a quarter of the department’s projected increase in national debt as a proportion of national income. The

calculations were based on the expectation that workers would outnumber pensioners by just two to one by 2050 compared with four to one at present. The imbalance is worse in other countries

such as Italy, according to the department. Advertisement This gives Ireland more time to take action “before the budgetary implications of population ageing begin to impact”, it said. The

department warned against complacency, however. “The window of opportunity is rapidly closing and any delay in implementing the necessary policy interventions will inevitably raise the cost

of the ageing of the population,” it said. The qualifying age for the state pension, which pays up to €248.30 a week from the age of 66, was a contentious issue in last year’s general

election, with politicians encountering widespread resistance to plans to raise it to 68. The incoming government backtracked on the plan, setting up the pensions commission led by former

Revenue chairwoman Josephine Feehily to advise it on reforming the age and other eligibility criteria. Its recommendations are due by the end of June. Feehily acknowledged, when the

commission was established in November, that increasing the state pension age “can be a cause of great concern”.