Robert Shortt analyses how two moves delivered in Budget 2024 may have a long-lasting legacy
Budget days still have a semblance of formal drama, despite the relatively recent practice of proposals being well and truly thrashed out, leaked, brought down to wires and finally getting over lines strung across government departments.There are the speeches in the Dáil and the responses from the Opposition.
That is not a big level of increase but the principal has been established that PRSI rates will rise to help pay for future State pension costs. If there were no changes to rates, the review expects annual deficits to reach €0.5 billion by 2035 and €3 billion by 2040.A working paper by the Irish Fiscal Advisory Council published earlier this year calculated that rates would need to rise by 3.5% from their current level.
It will also receive contributions of 0.8% GDP per annum, under the forthcoming legislation. That means another €4.3 billion next year.The investment returns on the fund will be used to defray future costs of everything from an ageing population to future economic challenges.It will receive the remaining €2 billion from the National Reserve Fund and additional sums of €2 billion over the next few years until it reaches €14 billion.
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