Last week, I was bringing my toddler daughter on the train for the first time. As bad planning goes, I booked late and was only able to get back-to-back seats, so when the train filled up, I took my daughter on my knee and went to stick on Peppa Pig on the tablet to keep her entertained \u2013 for my sake and the sake of all the other passengers too.<\/p>\n
No sooner was the tablet out, than the passenger across from me says to her friend: \u2018We are going to have to listen to that all the way to [bleeping] Dublin\u2019. Needless to say, we had words, but the tablet was muted (out of consideration). My new friend continued to talk \u2013 almost incessantly for the journey \u2013 to her friend, interspersed with expletives. I felt it necessary to remind her not to be a potty-mouth in front of the child. My wife called me and, pettily, I explained to her, loudly, how the our daughter\u2019s first train journey had been ruined by this lady.<\/p>\n
Society is increasingly oriented against families with children. Not too long ago, I was reprimanded in Tesco because I brought my trolley (carrying my daughter) into the self-checkout area. No trolleys allowed. The alternative, with a hungry child, was to join the queue for the only open non-self-check-out. And the queue was long. Instead, I parked the trolley outside the self-check-out area and carried the groceries in. I emailed my concerns at this anti-toddler policy to Tesco but got nothing but a bot-like reply.<\/p>\n
Parents are increasingly exposed to attitudes that are anti-child, and infrastructure that is not parent-with-young-child inclusive. Ever had to struggle to find a toilet with child-changing facilities? Or encounter inaccessible (for buggies as well as wheelchairs) restaurants and shops? Zawn Villines has argued that \u201cbanning children from public spaces is inherently sexist\u201d because it disproportionately impacts mothers. That is true. Ever experienced the glare when your child is acting up in public? Toddlers do this. It is a part of life.\u00a0 Non-parents do not understand.<\/p>\n
\u00a0<\/p>\n
Parents should have additional proxy vote<\/p>\n
Yet, children are the future. I would argue (as have others) that parents ought to get a proxy-vote for each of their non-voting age children rather than letting the child-free dictate policies that will impact our children\u2019s future. We are invested in the long-term. The childfree are not. I wish I had the wherewithal to think of this when I was talking to my wife. But most of all, I wished I remembered to highlight that my daughter will be the one paying the pension of the angry lady sitting across from me in the not-too-distant-future.<\/p>\n
I can\u2019t be sure that she didn\u2019t have children of her own to contribute to her pension. But there are many who share the same hostile attitude who are members of childless and proud groups. My daughter, and my investment in raising my daughter, will be paying the pension of this woman, and others like her, who have no tolerance for their presence and their needs in public spaces.<\/p>\n
In Ireland, we pay taxes on what we earn: income tax, social protection tax, the universal social charge. We pay taxes on what we spend: VAT, excise duty, carbon tax. We pay taxes for what we do: motorway tolls, motor tax, TV license. We pay tax for what we have: dog licence, property tax. These taxes never seem go down. And they never seem to be revoked. It was Will Rogers who possibly said \u201cThe only difference between death and taxes is that death doesn\u2019t get worse every time Congress meets.\u201d<\/p>\n
Some of these taxes we pay are to pay for the provision of the common good \u2013 ie running a government, having a health service. Some of these are what could be called redistributive taxes that are used for social welfare, child benefit, pensions. Others are insurance taxes: social protection in the event we lose our jobs. Some other taxes are punitive: doing something that is \u2018frowned\u2019 upon, such as smoking or drinking alcohol, or using carbon in our fuel. Carbon tax can also be considered a \u2018present\u2019 tax levied by the future. There is a lot of overlap on these. They all go into the public purse, rarely ringfenced and tied to their purpose. I don\u2019t ever recall seeing a report on how my carbon tax has been spent in offsetting my carbon or undoing the purported damage. When the government offers grants \u2013 or agrees to fund something \u2013 it is presented as a gift, manna from heaven,<\/p>\n
Birth Crash: Who will pay pensions?<\/p>\n
Yet, for all these taxes, we are facing into an impending pensions crisis with an aging population and falling birthrates. The Irish state pension is primarily funded by\u202fcurrent workers and employers through\u202fPRSI contributions which are paid into the Social Insurance Fund, and by the Government via general taxation. Future pensions will be paid by our children.<\/p>\n
This wasn\u2019t always the way. The Irish State pension fund, formerly the National Pensions Reserve Fund (NPRF), was largely repurposed during the post-2008 financial crisis to bail out Irish banks, basically resulting in there being no future pot of funds for the State pension. The present plan is to fund the State pension from concurrent taxation. This works while there are sufficient workers to pay for the present-day retirees. As the population pyramid continues to invert, this way of doing things is unlikely to be sustainable.<\/p>\n
In 2023, the Irish Fiscal Authority Council report \u201cSaving for Ireland\u2019s Future: Building a Sustainable Framework to Fund the State Pension\u201d, advised that \u2018Ireland\u2019s old-age dependency ratio is set to more than double by 2050 \u2026 those aged 65 and over as a share of the working age population, those aged 20-64, is set to rise from 25% in 2020 to 46% in 2050\u2019. That is a lot more people for the tax-take to support and at some stage it will tip over into unsustainability. As the Council report states: \u201cThis system will come under increasing pressure as the number of pensioners increases relative to the number of people of working age\u201d. The pensions of current workers will be paid in the future by the following generations.<\/p>\n
We\u00a0are in trouble and it is the children of those who procreate that will be paying the pensions of the growing number of older people in the country\u00a0unless something is done.\u00a0The current government\u2019s plan is limited to not \u201cincreasing the pension age and expects to meet the majority of future pensions costs through PRSI\u00a0(social security)\u00a0increases\u201d.\u00a0(The State pension\u00a0should not be confused with newly introduced private pension auto-enrolment scheme which\u00a0mandates everyone to sign up to a private pension with the\u00a0option\u00a0of opt-out after six months. This private pension would supplement the State pension, but\u00a0sceptics are also worried it may be a strategy to justify reducing the State pension in the future).<\/p>\n
In an effort to address the demographic death spiral, Hungary has attempted to introduce a wide-ranging series of measures including tax reliefs and exemptions for parents that have larger families. For example, as of January 1st 2026, mothers under 40 with 2 children or more are Personal Income Tax exempt, expanding a policy introduced in 2021 for mothers of four.<\/p>\n
Critics argue that the policies are failing after some initial success. Between 2011 and 2020, the Total Fertility Rate rose from a low of\u202f1.23\u202fto\u202f1.61 but in\u202f2024, the fertility rate dropped to\u202f1.39, the lowest level in over a decade. The population replacement rate is 2.1. Additionally, critics argue that the failing policy is creating unsustainable inflationary pressures. Hungary\u2019s response in 2026 has been to further increase tax exemptions and benefits for families \u2013 doubling down on what seems to be a failing approach. Time will tell for Hungary and there are many who would like to see the pro-family government in Hungary fail for reasons beyond the family policies.<\/p>\n
Writing in the Irish Times, Breda O\u2019Brien highlighted the \u2018grandchildren gap\u2019 being created by\u00a0Ireland\u2019s\u00a0falling birth rates, and that by 2037, for every 100 grandparents, there will be just 42 grandchildren. Her article elicited a strong response, many proudly\u00a0announcing they were child-free by choice and that it was no one\u2019s business but theirs.\u00a0Fewer and fewer\u00a0of the next generation will be available to pay the pensions of\u00a0more and more\u00a0of the current generation.<\/p>\n
The \u2018childfree-by-choice\u2019 depend on us<\/p>\n
The \u2018childfree-by-choice\u2019 cohort will be dependent on the people who choose to have children and the grandchildren of today and tomorrow, to provide for their pensions. There is an element of free-riding in this approach. Choosing to have children is not just an individual choice, it has societal and economic implications. It also has personal consequences if the State pension becomes unsustainable. The advantage for the \u2018childfree-by-choice\u2019 cohort is that they have much more disposable income to load into private pension funds and may not be too concerned about the collapse of the State pension.<\/p>\n
Tax breaks, reliefs and allowance may be failing to have the desired impact in Hungary. This does not necessarily mean that the overall idea is wrong, but it could be because of what is described as \u2018loss aversion\u2019.\u00a0 In\u202fcognitive science\u202fand\u202fbehavioral economics,\u202floss aversion\u202frefers to a\u202fcognitive bias\u202fin which the same situation is perceived as worse if it is framed as a loss, rather than a gain. In simpler terms, Hungary\u2019s policy may be more effective if adults were taxed for not having children rather than receiving exemptions when they do have children, so that they would see the punitive\/redistributionist\/common good tax exiting their pay cheque on a weekly\/monthly basis.<\/p>\n
Research by Kahneman and Tversky shows that \u201cThe response to losses is stronger than the response to corresponding gains\u201d, by a ratio of at least 2:1. Loss aversion was first proposed as an explanation for the endowment effect\u2014the fact that people place a higher value on a good that they own than on an identical good that they do not own but could gain. Taking my money from me via taxes is more effective an inducement than offering me money through incentives, exemptions or reliefs.<\/p>\n
Offering tax breaks as Hungary does to incentivise adults to have children may not be as effective as doing the equal \u2013 but opposite \u2013 act of taxing people for not having children. No doubt, because it would be viewed as \u2018taking something off me\u2019, it would elicit a much stronger reaction in a world dominated by \u2018choice\u2019. A government would be perceived as \u2018punishing\u2019 a choice rather than incentivising the opposite choice. But it is the same thing, except that the former approach may be more effective in promoting a desired social policy \u2013 a replacement birth rate and a sustainable State pension fund.<\/p>\n
In Ireland, the Fiscal Council report suggests that what is needed is to establish a separate, ring-fenced fund for pensions through a constant, higher PRSI rate to balance the fund in the long run, rather than relying on future tax hikes graduated in response to the changing demographics. The Government proposes to increase PRSI contributions so that all working-age people are contributing the same percentage of income. This may continue to fund the pension scheme but it can only go so far before the inflection point in the Laffer curve is passed and total contributions start to decline again. It does nothing to address the demographic decline and merely punishes the children of the people who choose to have families.<\/p>\n
Any approach to solving the future pension problem involves someone feeling punished \u2013 whether it is the workers or the pensioners of tomorrow. Societies choices today are going to be felt by the next generation. Reconsidering tax-reliefs for people who have children and framing them as taxes on those who don\u2019t as contributions to the future State pension fund may refocus the narrative through the lens of aversion loss and the endowment affect. The choice will be more stark \u2013 have children now and bear the cost of them as an investment in the State pension, or don\u2019t have children and pay into a pensions fund.<\/p>\n
For those that feel their choice is punished, the reality ought to be explained that it is the children who will suffer through future punitive taxes to fund their state pension. Surely it is not fair that the people who contribute to the future State pension fund by having children should expect that their contribution \u2013 and the cost involved in raising children \u2013 should subsidise those that don\u2019t? Most certainly it is not fair that the adults of tomorrow will be weighed down because of the selfish, short-term, policy cowardice of today.<\/p>\n
While I cringe at politicians or activists, who talk about \u2018our children\u2019, or \u2018the nation\u2019s children\u2019, it is time to think of these children and to do it quickly. If the demographic decline is not stemmed, the children of today and tomorrow will be increasingly drowning in taxes to fund the State pension of the adults of today. For those that do not have children, a redistributive contribution ought not be considered unreasonable.<\/p>\n
Some will respond claiming unfairness. Some people cannot have children, whether through misfortune or simply not finding a partner.\u00a0It does not feel fair that they should be\u00a0doubly-punished\u00a0for a cross they\u00a0have to\u00a0bear.\u00a0In\u00a0writing\u00a0this article,\u00a0an initial\u00a0draft shared elicited such a response: taxing people for not having children is dangerous. It\u00a0feels wrong \u2013 and my gut reaction is the same.<\/p>\n
Additional taxes on the childless?<\/p>\n
This response stems from two places: the first assumption that a \u2018no-child\u2019 or \u2018future pension\u2019 tax means an additional tax for some \u2013 and as outlined above, we have enough taxes. This is not the case. It can be simply a reframing of tax reliefs as a lower tax base.<\/p>\n
The second response is that some people simply\u00a0can\u2019t\u00a0have children, or\u00a0don\u2019t\u00a0have children, and it feels like a\u00a0punishment. A\u00a0double-punishment. This is not the case when future pensions are considered. Those that have children absorb the cost of raising them, the future workers \u2013 and pension payers \u2013 of tomorrow.\u00a0Those that do not, for whatever reason, escape this cost and a tax is a redistribute\/common good equalisation.\u00a0Otherwise, we are saying \u2018You were lucky enough to have children that will fund my future pension, then you suck up the cost that goes with it \u2013 and your children too\u2019.\u00a0That hardly shouts fairness.<\/p>\n
Until recently, my view was that if I pay taxes all my working life, then I have earned my state pension \u2013 because I thought that the State was investing some of my taxes into a pension fund to prudentially plan for the future, just as I am doing with my own PRSA contributions (albeit belatedly). Little did I realise that my daughter\u2019s future was being auctioned off to prop up today\u2019s economy.<\/p>\n
Taking some notional figures. Using Hungary\u2019s model of reliefs and incentives: If you earn \u20ac50k a year, you pay \u20ac12k tax and you get a get, say, \u20ac4k relief for having a child. Reversing the presentation.\u00a0\u00a0Under the proposed model, if you earn \u20ac50k a year, you pay \u20ac8k tax as your basic, but while you have no children \u2013 you pay an additional \u20ac4k in advance\/future State pension contributions (your no-child tax). It is the exact same result, monetarily and fiscally, for the individual and for the State. The risk aversion idea is that you are more likely to be incentivised by money being taken off you now than you are to saving money in the future.<\/p>\n
If you want a pension funded in the future and you\u00a0don\u2019t\u00a0contribute the children needed to do it (and the cost that goes with\u00a0them) then you ought to be paying for it through some other means.\u00a0\u00a0And if the endowment effect is real, a tax for not having children is likely to be twice as effective as offering reliefs and allowances for having them.\u00a0It may result in two significant benefits: an upturn in fertility rates and a sustainable\u00a0pension fund \u2013 a virtuous circle.<\/p>\n
And a third benefit: the angry lady sitting across from me can argue that she is paying for her peace and quiet \u2026<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
David Reynolds<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"Last week, I was bringing my toddler daughter on the train for the first time. As bad planning…\n","protected":false},"author":2,"featured_media":387945,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[131020,72,176,61,60,1558,174,175],"class_list":{"0":"post-387944","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-birth-rate","9":"tag-business","10":"tag-finance","11":"tag-ie","12":"tag-ireland","13":"tag-pensions","14":"tag-personal-finance","15":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/387944","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=387944"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/387944\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/387945"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=387944"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=387944"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=387944"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}