The State's pensions and welfare fund had a shortfall of €1.5bn last year and the deficit will continue to grow if action is not taken, an Oireachtas Committee has been told.

A report commissioned by the Department of Social Protection found that the policy changes are needed to avoid the shortfall in the Social Insurance Fund from increasing.

Department officials told the Committee on Education and Social Protection that without action, the deficit will rise to more than €3bn by 2019 and €25.7bn by 2066.

Principal Officer of PRSI Policy at the Department of Social Protection, Mary Kennedy, said the figure of €324bn reported recently refers to accumulation of deficit up to 2066, assuming no action is taken.

The report has identified rapidly rising pension liabilities, a result of an ageing population, as the main factor behind the funds soaring deficit.

The Social Insurance Fund is financed by pay-related social insurance contributions and is used to pay State pension and welfare benefits.