125. Deputy Patricia Ryan asked the Minister for Finance with regard to the €13 billion company tax bill (details supplied), if there are plans to re-instate the National Pension Reserve Fund, which was decimated in 2010 to bail out the banks; and if not, the reason why, given our rapidly increasing older age demographic. [38222/24]

While Ireland’s demographic profile is relatively favourable at present, it is set to age rapidly over the coming decades bringing us closer to the EU norms. While it is, of course, a very positive development that people in Ireland are living longer, healthier lives, it is important that we understand the significant impact these trends will have for our economy, public finances as well as on Irish society, more broadly.

To put the expected ageing of our population into perspective, Ireland will experience one of the largest proportional increases in the ratio of people aged over the age of 65 to those of working age between now and 2050. Indeed, while there are currently around 4 persons of working age for each retiree in Ireland; by 2050 the ratio will be around 2.

These changes will have major economic and fiscal implications. The impact of population ageing on labour supply will slow the productive capacity of the economy, whilst at the same time, increased expenditure pressures in demographically sensitive areas such as pensions and healthcare will put pressure on the public finances. Indeed, by 2050, annual age-related expenditure is expected to be six percentage points of GNI* higher than current levels. So by the mid-point of the century, annual age-related expenditure in Ireland is projected to overtake the EU and euro area average.

In this context, the Irish government has established the Future Ireland Fund (FIF), a long-term savings fund with the return on the Fund used to support expenditure in a consistent and sustainable manner from 2041 onwards. This will help to offset future recognised expenditure pressures, including those related to ageing.

The National Pension Reserve Fund (NPRF) was established in 2001 to smoothen the Exchequer burden arising from Ireland’s additional pension commitments over a lengthy period. After assets in the NPRF were invested in AIB and Bank of Ireland during the financial crisis, the remaining assets of the Fund were transferred to the Irish Strategic Investment Fund (ISIF) in 2014 before the NPRF was dissolved in 2021. As the newly established FIF has been established to support future State expenditure pressures such as increased expenditure related to population ageing, there are no plans to re-instate the NPRF.

Nevertheless, while the establishment of the FIF will enable the building up of fiscal buffers in response to future expenditure pressures, it is clear that further reforms will be required to fully address the fiscal pressures associated with an ageing population over the coming decades.